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All hail Kerko, king of the billion dollar buyout
By Richard Siklos (Filed: 20/06/2004)
The Telegraph, UK
June 20 2004
Ace Greenberg, the legendary former head of investment bank Bear
Stearns, once admonished a colleague who questioned the wily ways
of Kirk Kerkorian: "Don't ever tell Babe Ruth how to hold his bat."
(Translation for UK relevance: "Don't tell Becks how to lace his
boots".)
In an age of wannabes and poseurs, when it comes to power-broking
mastery, Kerkorian is the real deal - the Warren Buffett of buyouts.
This week, in what ought to be the gloaming of his career (he's 87),
he's in the midst of wangling his biggest trade yet - getting out
of one fantastically glamorous but sometimes spivvy industry while
beefing up in, well, another fantastically glamorous but sometimes
spivvy industry.
Kerkorian is on the verge of selling the Metro-Goldwyn-Mayer movie
studio to a venture between Sony and two private equity groups for
$5bn (£2.7bn), not counting a $1.4bn tax-free dividend cheque he
banked from the company last month.
Kerkorian's Tracinda Corporation paid $1.3bn for MGM in 1996 and -
get this - this would mark the third time since 1969 he has bought
and sold the place (first to Ted Turner, then to Carlo Paretti),
making buckets of cash each time.
Meanwhile, last Wednesday, his MGM Mirage hotel and casino company
sealed a deal to pay $4.8bn for the Mandalay Resort Group, the Las
Vegas-based company. The confluence of these deals is a bit of a
coincidence, given that Kerkorian has been trying to unload MGM for
a while, and has been gobbling up properties on the Las Vegas strip
for years. But you've still got to admire the octogenarian's sheer
audacity.
As a result of the Mandalay purchase, Kerkorian will be the biggest
casino boss in Vegas history - bigger than Bugsy Seagal, bigger than
Howard Hughes, bigger than Steve Wynn, whose renowned Bellagio resort
he swallowed up four years ago in a hostile takeover.
In total, Kerkorian will preside over 11 casino resorts on the famed
strip alone, including the Mirage, Excalibur and Luxor. Kerkorian's
empire would also include 17 other gambling halls in Nevada, other
corners of the US, and Australia. His MGM Grand resort is already
the biggest venue in Vegas, but if the Mandalay deal passes muster
with regulators he'll control more than half the hotel rooms and 40
per cent of the slot machines in town. As one wag put it in a local
Las Vegas paper: "It gives them the ability to cater to everyone,
from Joe Six Pack to the Crown Prince of Saudi Arabia."
As far as MGM the movie studio goes, did you catch its last cinematic
blockbuster? Me neither, but that's because the studio has produced a
lot more forgettable duds than mega-hits. Its main success has been
the James Bond series and a string of low-budget, sequel-friendly
releases such as Jeepers Creepers and Barbershop. But the value of MGM
apparently lies in the vault of 4,000 old movies, including The Wizard
of Oz, Gone with the Wind, Rocky and Annie Hall, that are expected
to have new legs in this age of re-mastered DVDs and video-on-demand.
"Kirk is not a Hollywood person, he's a money person," fellow
billionaire David Geffen recently told Variety magazine. "He's a
businessman, he's not nostalgic and sentimental."
Kerko (as he was known) was born in Fresno, California, to a family
of raisin farmers, and his life followed a fairly epic path from
there including dropping out of school at 13, a stint as a captain
in the Royal Air Force during World War II - he ferried planes back
and forth from Canada - and a successful career as a prizefighter
with the nickname "Rifle Right".
Apparently he queues for movies and has never ordered up a private
screening of one of MGM's movies. Although he never gives interviews,
Kerkorian's friends and executives take pains to point out that rather
than being a Howard Hughes-esque recluse, he just couldn't care less
about publicity. His top managers bash the tennis ball with him on
weekends at his Beverly Hills mansion. His company's odd title is an
amalgam of his daughters' names - Tracy and Linda. Worth around $6bn
he's given some $150m to various causes in Armenia, but adamantly
refused invitations to have boulevards, airports and schools there
named after him.
In the business world, there are few destinations that have emptied
more pocketbooks and broken more dreams than Vegas and Hollywood. As if
conquering them wasn't enough, who can forget Kerkorian's bold play to
take over the automaker Chrysler in the 1990s? Even more entertaining
has been his ongoing $3bn lawsuit against DaimlerChrysler over the
1998 merger that created the auto giant.
The billionaire testified in a Detroit court in February that he
was deceived by DaimlerChrysler chairman Juergen Schrempp's public
statement that it would be a "merger of equals". (German executives
from the Daimler side ended up dominating the top jobs, but the
company has dismissed his claim as frivolous.) When DaimlerChrysler
lawyers tried to point out that Kerkorian, then Chrysler's biggest
shareholder, hadn't even read the deal's final prospectus before
backing the merger, Kerkorian exploded in court: "I looked at the
merger as honest. We didn't look in every nook and cranny for deceit,
but it was there." A verdict in that case is expected this fall.
So what makes King Kirk run? No one can really say. Maybe he's just
trying to save up a little for his retirement.
From: Emil Lazarian | Ararat NewsPress
By Richard Siklos (Filed: 20/06/2004)
The Telegraph, UK
June 20 2004
Ace Greenberg, the legendary former head of investment bank Bear
Stearns, once admonished a colleague who questioned the wily ways
of Kirk Kerkorian: "Don't ever tell Babe Ruth how to hold his bat."
(Translation for UK relevance: "Don't tell Becks how to lace his
boots".)
In an age of wannabes and poseurs, when it comes to power-broking
mastery, Kerkorian is the real deal - the Warren Buffett of buyouts.
This week, in what ought to be the gloaming of his career (he's 87),
he's in the midst of wangling his biggest trade yet - getting out
of one fantastically glamorous but sometimes spivvy industry while
beefing up in, well, another fantastically glamorous but sometimes
spivvy industry.
Kerkorian is on the verge of selling the Metro-Goldwyn-Mayer movie
studio to a venture between Sony and two private equity groups for
$5bn (£2.7bn), not counting a $1.4bn tax-free dividend cheque he
banked from the company last month.
Kerkorian's Tracinda Corporation paid $1.3bn for MGM in 1996 and -
get this - this would mark the third time since 1969 he has bought
and sold the place (first to Ted Turner, then to Carlo Paretti),
making buckets of cash each time.
Meanwhile, last Wednesday, his MGM Mirage hotel and casino company
sealed a deal to pay $4.8bn for the Mandalay Resort Group, the Las
Vegas-based company. The confluence of these deals is a bit of a
coincidence, given that Kerkorian has been trying to unload MGM for
a while, and has been gobbling up properties on the Las Vegas strip
for years. But you've still got to admire the octogenarian's sheer
audacity.
As a result of the Mandalay purchase, Kerkorian will be the biggest
casino boss in Vegas history - bigger than Bugsy Seagal, bigger than
Howard Hughes, bigger than Steve Wynn, whose renowned Bellagio resort
he swallowed up four years ago in a hostile takeover.
In total, Kerkorian will preside over 11 casino resorts on the famed
strip alone, including the Mirage, Excalibur and Luxor. Kerkorian's
empire would also include 17 other gambling halls in Nevada, other
corners of the US, and Australia. His MGM Grand resort is already
the biggest venue in Vegas, but if the Mandalay deal passes muster
with regulators he'll control more than half the hotel rooms and 40
per cent of the slot machines in town. As one wag put it in a local
Las Vegas paper: "It gives them the ability to cater to everyone,
from Joe Six Pack to the Crown Prince of Saudi Arabia."
As far as MGM the movie studio goes, did you catch its last cinematic
blockbuster? Me neither, but that's because the studio has produced a
lot more forgettable duds than mega-hits. Its main success has been
the James Bond series and a string of low-budget, sequel-friendly
releases such as Jeepers Creepers and Barbershop. But the value of MGM
apparently lies in the vault of 4,000 old movies, including The Wizard
of Oz, Gone with the Wind, Rocky and Annie Hall, that are expected
to have new legs in this age of re-mastered DVDs and video-on-demand.
"Kirk is not a Hollywood person, he's a money person," fellow
billionaire David Geffen recently told Variety magazine. "He's a
businessman, he's not nostalgic and sentimental."
Kerko (as he was known) was born in Fresno, California, to a family
of raisin farmers, and his life followed a fairly epic path from
there including dropping out of school at 13, a stint as a captain
in the Royal Air Force during World War II - he ferried planes back
and forth from Canada - and a successful career as a prizefighter
with the nickname "Rifle Right".
Apparently he queues for movies and has never ordered up a private
screening of one of MGM's movies. Although he never gives interviews,
Kerkorian's friends and executives take pains to point out that rather
than being a Howard Hughes-esque recluse, he just couldn't care less
about publicity. His top managers bash the tennis ball with him on
weekends at his Beverly Hills mansion. His company's odd title is an
amalgam of his daughters' names - Tracy and Linda. Worth around $6bn
he's given some $150m to various causes in Armenia, but adamantly
refused invitations to have boulevards, airports and schools there
named after him.
In the business world, there are few destinations that have emptied
more pocketbooks and broken more dreams than Vegas and Hollywood. As if
conquering them wasn't enough, who can forget Kerkorian's bold play to
take over the automaker Chrysler in the 1990s? Even more entertaining
has been his ongoing $3bn lawsuit against DaimlerChrysler over the
1998 merger that created the auto giant.
The billionaire testified in a Detroit court in February that he
was deceived by DaimlerChrysler chairman Juergen Schrempp's public
statement that it would be a "merger of equals". (German executives
from the Daimler side ended up dominating the top jobs, but the
company has dismissed his claim as frivolous.) When DaimlerChrysler
lawyers tried to point out that Kerkorian, then Chrysler's biggest
shareholder, hadn't even read the deal's final prospectus before
backing the merger, Kerkorian exploded in court: "I looked at the
merger as honest. We didn't look in every nook and cranny for deceit,
but it was there." A verdict in that case is expected this fall.
So what makes King Kirk run? No one can really say. Maybe he's just
trying to save up a little for his retirement.
From: Emil Lazarian | Ararat NewsPress