DaimlerChrysler chief executive Juergen Schrempp testified on Wednesday that the 1998 combination of Chrysler and Daimler-Benz was a merger of "two great entities on an equal basis," as he rejected fraud charges for the second straight day, Reuters reported.

"I never, ever intended to do anything else other than what we negotiated and is contained in the business combination agreement," Schrempp reportedly said in US District Court in Wilmington, Delaware.

Reuters noted that Schrempp, mastermind of the $US36 billion deal creating DaimlerChrysler, is accused of fraud by billionaire investor Kirk Kerkorian, who claims that Daimler-Benz dishonestly characterised a takeover of Chrysler as a merger.

The distinction is important because shareholders are entitled to a "change of control" premium in takeovers, as opposed to mergers, the report added.

Reuters said Kerkorian, who owned nearly 14% of Chrysler and is seeking more than $1 billion in damages, contends that Schrempp and other Daimler executives lied about their intentions to lower the transaction price.

But in line with his testimony on Tuesday, the DC head denied any wrongdoing, the report said.

Reuters said Kerkorian's case rests largely on an October 2000 interview Schrempp gave the Financial Times in which the German appeared to suggest that the deal was only billed a merger of equals for "psychological reasons" and said he always intended to make Chrysler a "division" of the combined company.

But, the report said, Schrempp defended his remarks to the newspaper, saying he had sought to stress that DaimlerChrysler was "an international, integrated automotive company" with two distinct operating divisions including Daimler-Benz.

According to Reuters, he acknowledged that he had avoided using the term "division" before the Financial Times interview, something that could strengthen Kerkorian's claim that details of the Chrysler acquisition were withheld to appease shareholders.

"When you go out and loosely say that Chrysler would become a division of DaimlerChrysler we would have had tremendous problems with our people. I believe it was right the way we did it," Schrempp reportedly said.

Reuters noted that shares in DaimlerChrysler have fallen more than 50% since the November 1998 deal was made but Schrempp reportedly said he voiced no regrets about forming the world's fifth-largest carmaker.

According to the Reuters report, he said he was now "firmly convinced" that "only by merging these two great entities on an equal basis are we able to get this company to be No. 1."

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