General Motors Corp and billionaire investor Kirk Kerkorian have failed to reach an agreement on Kerkorian's request to gain a seat on the automaker's board for his aide Jerome York, the automaker and Kerkorian said in a joint statement on Friday.
"Although the parties have had constructive discussions, they have not been able to reach a mutually satisfactory agreement ... at this time," GM and Kerkorian's private equity firm, Tracinda Corp, said in a joint statement.
GM and Tracinda said they expect to continue discussing the matter.
GM's spokeswoman Toni Simonetti wouldn't comment on Friday on why GM and Kerkorian failed to reach an agreement.
David Healy, an analyst with Burnham Securities, said GM and Kerkorian may have disagreed on how much power York would have or how many seats Tracinda would be allowed on the board, which now has 12 members.
GM confirmed on Wednesday it was in talks with Kerkorian about a board seat. Kerkorian has been amassing GM shares this year and now has a nearly 10 percent stake in the automaker. He said in a federal filing in September that he might seek a board seat.
York is a former Chrysler Corp and IBM Corp chief financial officer. Kerkorian and York worked closely together on a failed takeover bid of Chrysler in 1995. Tracinda is based in Beverly Hills, California, and is the majority owner of casino and hotel operator MGM Mirage Inc.
Some investors had hoped York would join the board in order to speed restructuring efforts at GM, which lost nearly US$4 billion in the first nine months of the year. Last month, the company announced a plan to cut 30,000 jobs and close 12 facilities by 2008.
Robert Barry, an auto analyst with Goldman Sachs, said in a note to investors recently that while York has an established record as a cost-cutter, his presence on the board might not have much effect. Barry said GM's problem isn't weak products or management but hefty, inflexible labor contracts.
Kerkorian, 88, the former owner of the MGM movie studio, has a history of wrestling with automakers to increase the value of his investment. He sued DaimlerChrysler AG after the merger of Chrysler Corp and Daimler-Benz AG, saying the deal cost him millions because it wasn't a true merger of equals.
When Kerkorian acquired 18.9 million GM shares in June, he paid US$31 apiece. On Friday, GM shares were up US$0.92 to close at US$22.92 in New York.
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