PHILADELPHIA, May 25 (Reuters) - DaimlerChrysler (XETRA
CXN.DE - News; NYSECX - News) has been hit by a third lawsuit claiming that the 1998 deal that formed the German-American automaker cheated investors out of billions of dollars because it was deceptively billed as a "merger of equals" rather than a takeover.
The latest suit, filed in U.S. District Court in Delaware Monday on behalf of investors outside the United States, cites Daimler-Benz investment bankers' estimates that Chrysler was worth between $10 billion and $36 billion more than its shareholders received.
"While an acquisition would have resulted in a payment of a 'control premium' which would have pushed the acquisition premium well above 40 percent, the smaller premium received by shareholders of Chrysler was purportedly justified because control of DaimlerChrysler was to be shared by former management of both companies," according to the suit, a copy of which was obtained by Reuters.
DaimlerChrylser, the world's fifth-largest automaker, is also being sued by billionaire investor Kirk Kerkorian, whose Tracinda Corp. was the largest shareholder in Chrysler at the time of the merger. Kerkorian is seeking $1.35 billion plus other expenses, saying he too was misled into believing the transaction was a merger of equals, depriving him of the "control premium."
Kerkorian's suit was prompted by an October 2000 Financial Times interview in which DaimlerChrysler Chairman Juergen Schrempp, German mastermind of the merger, said he had intended Chrysler to become a division rather than an equal partner.
The new suit contends that Schrempp and his allies cemented their takeover of the No. 3 U.S. automaker by naming former Daimler executives to key positions in the new company.
DaimlerChrysler settled the first legal challenge to the merger, a class-action lawsuit filed by U.S. investors, by agreeing to pay $300 million last August.
Full Story HERE
CXN.DE - News; NYSECX - News) has been hit by a third lawsuit claiming that the 1998 deal that formed the German-American automaker cheated investors out of billions of dollars because it was deceptively billed as a "merger of equals" rather than a takeover.The latest suit, filed in U.S. District Court in Delaware Monday on behalf of investors outside the United States, cites Daimler-Benz investment bankers' estimates that Chrysler was worth between $10 billion and $36 billion more than its shareholders received.
"While an acquisition would have resulted in a payment of a 'control premium' which would have pushed the acquisition premium well above 40 percent, the smaller premium received by shareholders of Chrysler was purportedly justified because control of DaimlerChrysler was to be shared by former management of both companies," according to the suit, a copy of which was obtained by Reuters.
DaimlerChrylser, the world's fifth-largest automaker, is also being sued by billionaire investor Kirk Kerkorian, whose Tracinda Corp. was the largest shareholder in Chrysler at the time of the merger. Kerkorian is seeking $1.35 billion plus other expenses, saying he too was misled into believing the transaction was a merger of equals, depriving him of the "control premium."
Kerkorian's suit was prompted by an October 2000 Financial Times interview in which DaimlerChrysler Chairman Juergen Schrempp, German mastermind of the merger, said he had intended Chrysler to become a division rather than an equal partner.
The new suit contends that Schrempp and his allies cemented their takeover of the No. 3 U.S. automaker by naming former Daimler executives to key positions in the new company.
DaimlerChrysler settled the first legal challenge to the merger, a class-action lawsuit filed by U.S. investors, by agreeing to pay $300 million last August.
Full Story HERE
