DETROIT -- Chrysler Corp. is considering buying back more stock and raising its annual dividend to increase shareholder value, which some investors and analysts said will forestall Kirk Kerkorian's $20.51 billion takeover bid for the company.
"I think Chrysler has been looking to increase its dividend before the end of the year, and maybe Kerkorian is just speeding things up a bit," said David Healy, an independent auto analyst.
The No. 3 U.S. automaker raised the possibility of repurchasing shares and raising its dividend in a letter from company Chairman Robert Eaton. It was included as part of an amended proxy statement filed yesterday with the Securities and Exchange Commission.
Chrysler responded to complaints from Mr. Kerkorian in December by raising its annual dividend to $1.60 a share from $1.
Also yesterday, the company declined to confirm or deny a report that the automaker is willing to buy Mr. Kerkorian's 10 percent stake if he signed an agreement ending his takeover bid.
Michael Claes, a spokesman for Mr. Kerkorian's Tracinda Corp. in New York, said no meetings ever took place to discuss such a proposal.
Chrysler stock rose 25 cents per share yesterday, to close at $42.25. The company is almost halfway through a $1 billion stock repurchase.
Mr. Kerkorian, Chrysler's largest shareholder, made a $55-a-share bid to acquire Chrysler on April 12. And he demanded that Chrysler triple its dividend to $5.
Chrysler has rejected the acquisition offer.