USA: Chrysler investors short-changed $US6 billion, Kerkorian case court told - paper
A Wall Street banker yesterday testified that Chrysler shareholders were short-changed by more than $US6 billion when the car maker agreed to merge with German rival Daimler-Benz, the Daily Telegraph said.
The paper said Conrad Meyer of Gleacher Partners was giving evidence as a lawsuit by billionaire investor Kirk Kerkorian against Daimler entered its second week in court.
The report noted that Kerkorian wants compensation of at least $1 billion after claiming he was duped into pledging his 14% stake in the Detroit-based car maker towards what he thought was a merger, but which quickly became a takeover.
According to the Daily Telegraph, Meyer said Chrysler should have been valued at $43.6 billion rather than the $37.2 billion agreed under the terms of the 1998 deal. Chrysler investors "gave more than they got" the banker, an expert witness called by Kerkorian's legal team, reportedly said.
The newspaper said Juergen Schrempp, the Daimler chairman who led what was one of the biggest car deals ever, is expected to testify this week in a case that has exposed considerable bad feeling. Both sides insist they will not settle, Kerkorian maintaining that the case is about morality rather than money. "It's about deceit and fraud on Daimler's part," he said, according to the Daily Telegraph.
The newspaper noted that, last week, in an apparent blow to Kerkorian's argument that Chrysler was undervalued, former company chairman Robert Eaton noted that the car maker would probably have gone bust without the merger.
The Daily Telegraph said the case stems from an interview Schrempp gave to the Financial Times, where he was quoted as saying that the deal was only presented as a merger of equals for "psychological reasons", and noted that DaimlerChrysler shares have lost two thirds of their value since the merger. The German car giant settled a lawsuit by investors making similar claims earlier this year for $300 million, the report added.
The Daily Telegraph said Kerkorian, an 86-year-old casino operator, appears to be enjoying the limelight as, on Monday it emerged that he likes the courtroom portraits of himself so much he has bought them.