Kirk and Lee are playing a dicey game

"These managers who remain better get off their ass," he quips with his typical mixture of humor and profanity, "because I'm no longer talking as a retiree; I'm a big, big stockholder"

- Lee A. Iacocca, Chrysler Corp. chairman, as quoted in the January 1993 edition of Ward's Auto World.

It's late April and anything could still happen, but as the days rolled by it looked more and more certain that Kirk Kerkorian's takeover bid for Chrysler Corp. faced a decidedly uphill battle.

Even if the Las Vegas billionaire and his sidekick in the venture, former Chrysler Chairman Lee A. Iacocca, fail in the takeover try, they'll still emerge much richer for the effort. That's how it almost always works in takeovers: Put the stock in play and force management to buy you out at a premium price or make other moves to enhance share values.

There's no law against announcing a proposed bid, although perhaps there should be, given the big money that's at stake. In fact, however, while Chrysler's stock soared 24% on the day the bid was revealed before subsequently retreating back to the mid-40s, no final deal had been arranged and no bonafide tender offer had been filed with the federal Securities and Exchange Commission (SEC) as April came to a close.

Like other Kerkorian ventures, the Chrysler takeover plan is complex. He began accumulating Chrysler shares in November 1990 and by last December owned around 9% of all outstanding shares. Dissatisfied with Chrysler's stock price, he threatened a major shakeup unless Chrysler's management and board of directors took immediate steps to enhance share values and permit him to raise his stake to 10%. The result: a 60% boost in the dividend and a $1-billion stock buyback, both designed to kick up the price.

Responding to the April 12 bid, Chrysler tersely said it's "not for sale." In late April, directors formally rejected the bid, saying it would cause the company "major harm" and leave it "crippled."

He and Mr. Iacocca are dangling $55 a share for all Chrysler shares they do not already own. In the early going, critics maintained that price is far too low. Estimates of $80-plus were common, but there were no quick counter-offers and no "white knight" came dashing to rescue Chrysler from Mr. Kerkorian's clutches.

Here's how he visualizes the $22.3-billion deal: He puts up his 36 million Chrysler shares worth around $2 billion at $55. Mr. Iacocca puts up 910,000 Chrysler shares worth $50 million. Somehow they entice banks to come up with $12 billion, which is added to Chrysler debt. Other outside investors, possibly one or more foreign automakers, would put up $3 billion.

The most controversial part of the scheme is Mr. Kerkorian's designs on $5.5-billion of Chrysler's $7.5-billion cash horde, which Chairman Robert J. Eaton has been stockpiling to help finance a five-year, $23-billion product program and to tide the company over during the next down-cycle.

Mr. Kerkorian thinks that's way too much rainy-day money. So does Mr. Iacocca, whose credentials are not exactly pristine in that respect. Twice he waltzed Chrysler toward the brink of insolvency during his 14 years at the top.

In effect, Mr. Kerkorian wants to finance a big piece of his own takeover by using Chrysler's hard-earned cash, leaving only $2 billion in the kitty and repudiating current management's tough-times strategy.

Response among the bankers Kerkorian needs for success has not been swift. Two possible investors, Bear Steams & Co. and Kohlberg, Kravis & Roberts Co., nixed participation. Nor have any automakers made public commitments.

What's driving the Kerkorian/Iacocca quest? Greed is one simple answer. Ego is another. There's also opportunity: Chrysler has been the world's hottest automaker since Mr. Iacocca's departure, racking up huge profits and introducing one vehicle hit after another. But its stock remains under-valued, it has been hit by negative publicity concerning quality and safety issues, and it has yet to make significant inroads outside North America. None of those should be surprising to Mr. Iacocca; the same things could be said during his 14 years at Chrysler's helm.

Although both men are septuagenarians (Mr. Kerkorian is 77, Mr. Iacocca is 70), they apparently still get their kicks making deals - and making management squirm.

Here's what they have in common: Both are sons of immigrants, work hard at keeping in shape, and have an abiding interest in gambling. Mr. Kerkorian's Tracinda Corp., umbrella for his many investments, controls MGM Grand Inc., which operates the huge MGM Grand Hotel in Vegas. Mr. Iacocca sits on the MGM Grand board and, during the past year, has gotten heavily into gaming via Full House Resorts Inc., which he controls.

Beyond that, they are quite different. Mr. Kerkorian is a pilot who once owned his own airline - a commuter operating between Los Angeles and Las Vegas - and later controlled another large carrier. Mr. Iacocca loves his jet perks and bought Gulfstream Aerospace Corp. during the mid-`80s when Chrysler was flush with cash, later selling it when profits turned south.

Mr. Kerkorian is publicity-shy, drives his own modest cars and reportedly stands in line to buy tickets just like everyone else - even when he owns the joint. Mr. Iacocca loves the limelight and insists on perks and rewards. In one of the man ironies involved here, he actually is putting up Chrysler stock doled out to him in big gobs by a grateful board of directors to remain on the job. In yet another irony, he reportedly had to be pushed out when, at age 68, he was nearing retirement and began having second thoughts.

Mr. Iacocca claims he's not interested in returning to Chrysler as chief honcho, but his mere presence as part-owner in a privately held Chrysler alone would be enough to scare the bejeebers out of Mr. Eaton's management team - a team Mr. Iacocca boasts he put in place, including "hand-picking" Mr. Eaton.

And what about foreign automakers? During his Chrysler tenure, Mr. Iacocca failed despite numerous attempts to forge foreign partnerships, and he also cut Chrysler's ties with Peugeot SA and Mitsubishi Motors Corp.

How about Mercedes-Benz AG? "They have what we need and we have what they need," a former Chrysler exec tells WAW, "but they don't need him (Mr. Iacocca). If Iacocca was involved, they'd be scared to make a deal," he says.

A Chrysler insider also questions why Mr. Iacocca now wants to take on what he once called his "nice little board." Says he: "It's the same board that gave him all of that stock."

Indeed, many of his formerly close associates have become disillusioned, even embarrassed, about Mr. Iacocca's messy divorce from this third wife and his recent exploits into organized gambling. "He found out there are bigger crooks than he is," says one, adding that the facade that he's helping Native Americans is laughable. "The Indians don't need his help," he adds. "Hell, everyone's kissing their asses to get a piece of the action."

To one Chrysler insider, Mr. Iacocca has become "a pathetic figure. I never thought I'd feel sorry for him, but I do."

But not so sorry he'd send a sympathy note if Mr. Kerkorian and his old boss roll snakeyes.