DaimlerChrysler to settle merger suit with $300 million payment
Aug 25, 2003 12:00 PM
DaimlerChrysler AG will pay $300 million to resolve class-action claims that Daimler-Benz AG deceived investors by characterizing the 1998 takeover of Chrysler Corp. as a merger, Bloomberg reported. The company still faces a legal battle with billionaire financier Kirk Kerkorian, Chrysler's largest shareholder, who will not join the settlement, his lawyer says. A federal court trial on his fraud claims is set for December in Wilmington, Delaware. The investors, who sought $12 billion, would receive an estimated 40 cents to 50 cents per share depending on how many participate in the accord, investors' lawyers say. Shares of DaimlerChrysler, which did not admit to any wrongdoing, have fallen 51 percent since the $36 billion combination took effect in November 1998 as profits have failed to meet investors' expectations. "Considering the potential risk if things had turned out the wrong way for DaimlerChrysler, it made sense to settle the suit," said Alexander Scholl, who helps manage the equivalent of $14.7 billion at HSBC Trinkaus Capital Management in Dusseldorf, Germany. "In the context of their earnings, this isn't a lot of money," added Scholl, who refused to say how many DaimlerChrysler shares HSBC Trinkaus holds.
