DaimlerChrysler Settles Merger Lawsuit
DaimlerChrysler said Friday that it had agreed to pay $300 million to settle a class-action lawsuit filed by investors over the 1998 merger of Daimler-Benz and Chrysler Corp.
The automaker said it believed the suit seeking $22 billion was groundless, but it agreed to the settlement because “a local jury could reach a different conclusion.” Insurance is expected to cover $220 million of the payment.
The proposed settlement has no bearing on billionaire Kirk Kerkorian’s lawsuit against the company, parts of which are pending in court. Kerkorian’s Tracinda Corp. once held 14% of Chrysler’s stock.
The Chrysler shareholders whose claims were settled Friday had argued that they were duped into approving the deal that combined Chrysler and Daimler-Benz when executives from both companies portrayed it as a merger of equals.
“I think the settlement is a tremendous result for the shareholders,” said Jay Eisenhofer, lead attorney for the plaintiffs.
The settlement, which is subject to court approval, was among the largest ever paid in a shareholder class action, he said.
Kerkorian filed his lawsuit in November 2000. It claimed Daimler-Benz Chairman Juergen Schrempp -- now DaimlerChrysler’s boss -- and other company executives misled shareholders to cheat them out of their rightful acquisition fee.
Several class-action lawsuits were filed on behalf of other investors a short time later. They also contended that the consolidation was a takeover, not a merger. Those cases were consolidated to form the class action that was settled Friday.
DaimlerChrysler has stated Kerkorian not only approved the acquisition but also pushed for its completion. The company said Friday that it “remains committed to a vigorous defense of this case.”
Tracinda’s lawyer, Terry Christensen, said he was pleased by the settlement.
“We are very encouraged by DaimlerChrysler’s apparent admission that the claims brought by Tracinda and the class plaintiffs create significant exposure for DaimlerChrysler,” he said.
