Next up for Kirk: Petroleum refining

MGM Mirage majority shareholder Kirk Kerkorian, who has invested over the years in both the automotive and airline industries, turned his attention Friday to a petroleum refining company.

The 90-year-old Los Angeles billionaire and financier lodged a tender offer to acquire 16 percent of Tesoro Corp., a San Antonio-based oil refiner. Kerkorian, who controls 54 percent of MGM Mirage, already owns 4 percent of Tesoro. He made the offer through Tracinda Corp., his wholly owned investment vehicle.

The $1.4 billion deal was a $64 per share offer to acquire 28.75 million shares of Tesoro, which is traded on the New York Stock Exchange.

“Tracinda believes that the fundamentals of the petroleum refining industry make it an attractive area for investment,” Kerkorian said in a statement. “Tracinda has chosen to invest in Tesoro because Tracinda believes that the company is well-positioned within the industry and has a management team that is effectively executing its strategic plan.”

MGM Mirage spokesman Alan Feldman said the casino operator doesn’t comment on Kerkorian’s deals outside of the casino industry. Earlier this year, Kerkorian said he wanted to explore buying both Bellagio and the $7.4 billion CityCenter development from MGM Mirage. He withdrew the idea when MGM Mirage entered into a $4 billion joint venture deal with the investment arm of the Persian Gulf state of Dubai.

A year ago, Kerkorian sought to increase his holdings of MGM Mirage to more than 65 percent but wasn’t able to acquire enough shares.

All his MGM Mirage moves, however, were viewed by analysts as ways to increase the value of the casino company’s stock, which has risen more than 31 percent since this summer. MGM Mirage closed at $92.67 on the New York Stock Exchange Friday, up 96 cents, or 1.05 percent.

This fall, Kerkorian rose 19 places to No. 7 on the Forbes list of richest Americans, with an estimated net worth of $18 billion on the heels of investment gains by MGM Mirage.

Tesoro is a Fortune 150 company and an independent refiner and marketer of petroleum products, operating seven refineries in the Western United States with a combined capacity of approximately 660,000 barrels per day. Tesoro’s retail-marketing system includes more than 890 branded retail stations, of which more than 450 are company operated under the Tesoro, Shell, Mirastar and USA brands.

Kerkorian’s offer comes as oil has hit record prices of more than $90 a barrel, which has squeezed refiners’ margins because the prices of products such as gasoline have not kept up.

Tesoro, which will provide its earnings update to investors on Thursday, garnered praise from Soleil Securities for its recent move to buy a refinery in Los Angeles for $1.6 billion.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or (702) 477-3871.

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