USA: Billionaire loses fraud lawsuit against DaimlerChrysler
DaimlerChrysler reportedly claimed vindication on Friday after a US judge ruled no laws were broken in the 1998 linkup between Daimler-Benz and Chrysler, one of the biggest deals in automotive history.
Reuters said the ruling laid to rest a fraud lawsuit brought by billionaire Las Vegas casino mogul Kirk Kerkorian and his Tracinda Corp investment company that claimed German executives had falsely billed the $US36 billion deal as a merger of equals.
"We are happy that the court's decision confirms once and for all that Tracinda's lawsuit was absolutely baseless and that all the allegations against DaimlerChrysler in connection with the 1998 merger were completely unfounded," chief executive Juergen Schrempp said in a statement cited by the news agency.
He reportedly added the company would continue to work on making the merger a success and that its executives still felt obligated to create value for shareholders.
Reuters noted it was a welcome shot of good news for Schrempp, who faced hours of grilling at Wednesday's annual meeting by irate shareholders who accused him of strategic missteps and allowing shoddy quality to jeopardise the crucial Mercedes brand.
Kerkorian was Chrysler's leading shareholder when it signed the deal that Schrempp boasted would form the world's first truly global carmaker, the news agency added.
"The Court concludes that Tracinda has failed to prove its claims of common law fraud and violations of the Exchange Act," US district court judge Joseph Farnan in Delaware reportedly said in a ruling on Thursday.
Farnan ruled against all of Kerkorian's claims, Reuters said.
Kerkorian, who had demanded more than $1 billion in damages, reportedly contended that Schrempp only billed the deal as a merger of equals to lower the transaction price and avoid paying shareholders a "control premium".
Reuters noted that Kerkorian's suit followed comments Schrempp made to The Financial Times in October 2000 that he always meant to make Chrysler "a division" of Stuttgart-based DaimlerChrysler - Kerkorian sued shortly after the article appeared.
"The Americans were laughed at in the German board meetings for having agreed to become a German corporation," Kerkorian said in a statement after the ruling cited by Reuters, adding: "Daimler management marvelled at the success of their project blitz and the takeover of an American icon."
Tracinda reportedly said it is considering all of its options.
"The message delivered by this result is unfortunate for all shareholders," Terry Christensen, attorney for Tracinda said in a statement cited by Reuters.
The news agency added that DaimlerChrysler shares have nearly halved in value and have underperformed the DJ Stoxx European car sector index by almost 38% since they started trading in November 1998.