Business & Finance
Billionaire Kirk Kerkorian electrified Wall Street when his investment company, Tracinda Corp., submitted an $870 million tender offer Wednesday that would double its stake in General Motors. If accepted, it would raise his holdings to about 9 percent of the struggling automaker, whose share price recently hit a 12-year low. The news triggered an immediate 18 percent spike in GM's stock. Kerkorian is considered a savvy investor who puts his money in undervalued companies. In 1995, he led a hostile takeover attempt against Chrysler Corp. that gained him a seat on its board and billions of dollars when it later merged with Germany's Daimler-Benz AG. He also has owned movie industry giant MGM three times, only to sell it again. Tracinda officials said the proposed purchase of more GM stock is for investment purposes only and that Kerkorian is not seeking control over management.
For the past year, the FBI has been taking a "hard look" at the insurance industry to try to uncover possible accounting irregularities such as those that surfaced at American International Group, a senior official said Wednesday. In view of the savings-and-loan crisis in the 1980s and a spate of fraud in late 2001 and 2002 at Enron and other corporations, Assistant Director Chris Swecker said the FBI does not want to be "caught napping" if a crisis occurs in another industry. The agency released a report that cites a trend among insurance carriers to be caught in the "web" of fraud, although Swecker said it hasn't yet concluded that there is a pervasive problem.
In a second straight day of major layoff announcements:
• IBM said it will take a pretax charge of up to $1.7 billion to cover the cost of cutting between 10,000 and 13,000 jobs. Most of the layoffs will affect the company's European operations, a spokesman said, and will come on top of the 500 job cuts in Sweden that were announced in March.
• ArvinMeritor Inc., a leading supplier of brakes, exhaust systems, and other parts to the auto industry, will close 11 assembly plants over the next two years, it said. The plants weren't identified, but the Troy, Mich., company said the cutbacks would come primarily in its light-vehicle operations, most of which are overseas. In all, 1,850 employees will lose their jobs, it said.
• Cigna Corp., the health insurance underwriter, said it will eliminate another 1,700 jobs by year's end. Last year, 3,000 employees left the company, more than half of them when it sold its retirement unit to Prudential Financial.