A US district court judge on Friday denied a summary judgment filed by DaimlerChryler, paving the way for an investor group’s lawsuit against the vehicle maker to go forward, Dow Jones Newswires reported.
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The report said the ruling by judge Joseph Farnan in Wilmington, Delaware, means the suit brought by billionaire investor Kirk Kerkorian will go to trial on December 1.
Dow Jones said DaimlerChrysler had hoped to show that plaintiff’s claim wasn’t legally valid.
The news agency noted that Kerkorian, the biggest shareholder in US vehicle maker Chrysler Corporation when it merged with Germany’s Daimler-Benz in 1998, said Daimler-Benz misrepresented its intentions to shareholders, calling the deal a “merger of equals”, while planning a takeover of Chrysler.
If the deal had been called a takeover, Chrysler shareholders could have asked for more money, Kerkorian contended, Dow Jones said, adding that DaimlerChrysler and Kerkorian reached an agreement in 1998 that a judge would decide any disagreements between them.
Dow Jones said that, in his ruling on Friday, Judge Farnan noted evidence that defendant Juergen Schrempp, head of DaimlerChrysler, said in a 1998 meeting that he “intended the transaction to be a takeover, despite his representations to the contrary.”
In August, DaimlerChrysler agreed to pay $300 million to settle a class-action suit filed by institutional investors who also claimed they got paid less because Daimler misrepresented the transaction, Dow Jones added, noting that DaimlerChrysler agreed to the settlement, but denied the accusation.
According to Dow Jones, DaimlerChrysler’s [lawyer] told the judge the plaintiff, Tracinda Corporation, Kerkorian’s investment company, couldn’t prove its case because it relied on ” alleged oral misrepresentations” by Schrempp.
In his ruling, Judge Farnan wrote that “Tracinda’s evidence demonstrates that defendants mounted a full-scale communications campaign aimed at concealing their intent to take control of Chrysler and pressing the ‘merger of equals’ concept, the report said.
“In addition to Schrempp’s public statements in the Financial Times and Barron’s, Tracinda has offered evidence that the defendants launched a study code-named “Project Blitz” to analyse the feasibility of acquiring Chrysler,” the judge wrote, according to Dow Jones.
The news agency said the judge also wrote: “In connection with this study, defendants hired and met with several financial analysts and bankers who opined that an acquisition of Chrysler would be ‘significantly accretive” to Daimler shareholders.”
The judge added: “Tracinda has also offered evidence suggesting that defendants knew that an acquisition would not be well-received by Chrysler shareholders, that a merger of equals would fare better, and that it was important for ‘market psychology’ that the participants in the merger publicly emphasise that this was a merger of equals and not a buy-out,” Dow Jones added.
