Friday, April 8, 2005

Judge clears DaimlerChrysler of fraud

Federal court rejects Kerkorian's claim he was misled in the 'merger of equals.'

By Ed Garsten and Christine Tierney / The Detroit News

DaimlerChrysler vindicated A U.S. judge ruled that no laws were broken in the 1998 merger between Daimler-Benz and Chrysler, ending a lawsuit brought by billionaire shareholder Kirk Kerkorian. Kerkorian contended that he was owed $1 billion in damages for being falsely led into believing the 1998 deal was a merger of equals in order to lower the transaction price. Do you agree with the ruling? Yes No Get results and comments Error processing SSI file Comment on this story Send this story to a friend Get Home Delivery

DaimlerChrysler AG scored a resounding victory Thursday in its long and bitter legal battle with billionaire investor Kirk Kerkorian.

A federal judge rejected Kerkorian's claim that he was duped into backing the 1998 deal that merged Chrysler Corp. and Germany's Daimler Benz AG into DaimlerChrysler AG.

The ruling came 14 months after a trial in U.S. District Court in Wilmington, Del., that offered a rare glimpse into the strategies and intrigue that culminated in the celebrated $36 billion merger.

Kerkorian's Tracinda Corp., was Chrysler's biggest shareholder. He sought more than $1 billion in damages, claiming DaimlerChrysler AG CEO Juergen Schrempp misled investors in billing the deal as a "merger of equals." Chrysler shareholders were entitled to a premium for a takeover, Kerkorian said.

Kerkorian's contended the smoking gun was a 2000 interview Schrempp gave the Financial Times of London where he described himself as a "chess player" who always envisioned Chrysler as a "division" in the new company.

In a 125-page ruling Thursday, U.S. District Judge Joseph Farnan said, "Kerkorian supported the merger before he had any discussions with anyone about corporate governance."

In a statement, Schrempp said he was pleased with the ruling and that "we will continue to concentrate our efforts of making this merger a great success."

Said Kerkorian in a statement after the ruling: "The Americans were laughed at in the German board meetings for having agreed to become a German corporation. Daimler management marveled at the success of their project Blitz and the takeover of an American icon."

Tracinda is considering "all options," company attorney Terry Christensen said.