Monday June 18, 6:10 pm Eastern Time
Kerkorian, Automaker Spar Over Suit
Kerkorian Answers DaimlerChrysler's Motion to Dismiss Investor Lawsuit
By ED GARSTEN
AP Auto Writer
DETROIT (AP) -- Lawyers for financier Kirk Kerkorian's Tracinda Corp. said Monday in a legal brief that DaimlerChrysler AG [NYSE:DAJ - news] had perpetrated ``the perfect fraud'' against its shareholders.
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The brief is a reply to a motion by the automaker to dismiss lawsuits filed against it by Kerkorian and other investors.
The suits assert that shareholders were duped into approving the 1998 deal that combined Daimler-Benz AG and Chrysler Corp. when executives from both companies portrayed it as a merger of equals.
In a written statement, DaimlerChrysler called Tracinda's response an ``attempt at revisionist history.''
Last October, DaimlerChrysler chief executive Jurgen Schrempp revealed to the Financial Times, then a few days later in Barron's magazine, he purposely misled Chrysler executives and shareholders.
``We had to go a roundabout way,'' Schrempp told the Financial Times, ``but it had to be done for psychological reasons. If I had gone and said Chrysler would be a division, everybody on their side would have said, 'there is no way we'll do a deal.' But it's precisely what I wanted to do.''
Since the deal was consummated most of the former Chrysler leadership was either replaced, resigned or retired.
``How often do you get an admission like that?'' said Tracinda attorney Terry Christensen.
There's a multibillion dollar difference between a takeover and a merger, Christensen said.
In a takeover, stockholders would be due a fee called an acquisition premium.
Christensen said Kerkorian's Tracinda Corp., as one of Chrysler's largest shareholders, would have stood to earn an acquisition fee of between $1 billion and $2 billion.
The brief says Kerkorian voted in favor of the deal believing it was a true merger that would help add value to the company and his stock.
However, DaimlerChrysler shares that once traded at $108 a share in January 1999, were trading at $43.28 late in Monday's session.
In its statement DaimlerChrysler countered ``Tracinda participated in all the Chrysler board merger discussions and enthusiastically approved the detailed business combination agreement.''
The statement goes on to say in the two years since the merger was completed Tracinda participated in strategic decisions affecting the company ``yet it never once raised any objections prior to filing this lawsuit.''
Kerkorian is suing not only to undo the deal, but for about ``$2 billion in compensatory damages and about $6 billion in punitive damages,'' his attorney said.
The financier also is suing Hilmar Kopper, chair of the DaimlerChrysler supervisory board, as the ``architect'' of the deal for similar damages.
Christensen said a final brief will be filed in about a month and he expected a decision from a federal judge in Wilmington, Del., by August.
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