Daimler Execs on the hotseat
Merger or takeover?
A Daimler-Benz AG executive's notes written three months before the company combined with Chrysler Corp. describe a takeover rather than a merger, documents released last month in a federal court in Delaware show.
The notes from strategy chief Ruediger Grube conflict with executives' public statements in later months and may support assertions in a lawsuit by billionaire investor Kirk Kerkorian and other shareholders seeking as much as $15 billion from DaimlerChrysler AG. They say chief executive Juergen Schrempp and other executives gained control and avoided paying a takeover premium by calling the 1998 transaction a merger of equals.
The $36-billion combination hasn't boosted returns as executives predicted. DaimlerChrysler shares have fallen 62 percent since Nov. 17, 1998, the first day of trading, a larger slide than the 14-percent drop in the Standard & Poor's 500 Index and the 35-percent decline in Germany's DAX Index.
The company would need years to recover from a $15-billion verdict, said Doug Koester, a money manager at Commerce Trust. "Any hit of that size would be a hit to their earnings," said Koester, who helps manage $8 billion in bonds, including debt of DaimlerChrysler and rival automakers Ford Motor Co. and General Motors Corp.
Source: Detroit free press
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