just-auto.com

GERMANY: Court orders more money for Daimler-Benz shareholders

By just-auto.com editorial team | 21 August 2006

DaimlerChrysler on Monday was ordered by a German court to pay some former Daimler-Benz AG shareholders more money in a dispute over the valuation of their stock in the 1998 merger with Chrysler.

According to Reuters, a court spokesman said on Monday the Stuttgart court ruled that DC should pay an extra EUR22.15 per share to investors who were forced to tender their stock in the merger.

"We consider the ruling inappropriate and we will take legal action against it," a DaimlerChrysler spokesman told the news agency.

DaimlerChrysler had opposed an earlier proposal that it settle the case by paying the investors an extra EUR19 per share, or nearly EUR200m ($US256.7m).

"Let's say this (payment) is EUR230m. Even if they have made no reserves - and I imagine they have already covered the bulk of this with reserves - and the entire sum has a negative impact on earnings, you get to 23 cents per share and that is not really significant," DZ Bank analyst Tim Schuldt told Reuters.

A Frankfurt share trader reportedly agreed.

"At first glance it was negative of course. At second glance it was of negligible value," he said.

Holders of 1.8% of Daimler-Benz shares exchanged their stock involuntarily and some of them sought compensation in 1999, contending the ratio used in the exchange did not properly value their stock, the report noted, adding that DaimlerChrysler has insisted the exchange ratio was fair.

DZ's Schuldt told the news agency he did not think the case would have any impact on a pending US lawsuit by billionaire investor Kirk Kerkorian over how the merger was handled.

Kerkorian has appealed against a US court ruling dismissing his $1bn lawsuit that accused Daimler-Benz of misrepresenting the deal as a merger rather than a takeover, Reuters said.