Kerkorian Fighting the Fight

WILMINGTON, Del. December 3, 2003 Sholnn Freeman writing for the WSJ reported that billionaire investor Kirk Kerkorian said outside federal court here that he won't settle his civil suit against DaimlerChrysler AG and that the fight with the German-American auto maker is now "personal."

Mr. Kerkorian has accused DaimlerChrysler of fraud in its $36 billion merger with the former Chrysler Corp. in 1998. His Tracinda Corp. was Chrysler's largest single shareholder, and Mr. Kerkorian is seeking $2 billion in damages, arguing Daimler-Benz AG misrepresented its takeover of Chrysler as a "merger of equals" to avoid paying a takeover premium.

"It's not about money, it's about deceit," he said.

Mr. Kerkorian made his comments after completing a second day of testimony in the trial of his case.

He again tangled with DaimlerChrysler's lawyers over his motivations for bringing the case. The company is portraying Mr. Kerkorian as an investor who paid little attention to the details of the transaction. Lawyers are suggesting he filed suit only because DaimlerChrysler, under the new post-merger management, didn't give him the kind of attention he felt he deserved as a large shareholder.

In testimony, Mr. Kerkorian has said he enjoyed a friendly relationship with former DaimlerChrysler co-Chairman Robert Eaton, which included occasional dinners. Mr. Eaton is scheduled to testify Thursday.

In contrast to Mr. Eaton, Mr. Kerkorian said DaimlerChrysler Chairman Juergen Schrempp wouldn't meet with him, didn't return his phone calls and ignored Tracinda's demands that DaimlerChrysler buy back shares.

A lawyer for Mr. Kerkorian said there had been no contact from DaimlerChrysler about a settlement since before the beginning of the trial on Monday.

DaimlerChrysler officials also said there were no efforts to negotiate a settlement. Mike Schell, an attorney for DaimlerChrysler, has complained there has been too much speculation about a settlement. He said Mr. Kerkorian's charges were without merit and has repeatedly expressed confidence in his side's prospects.

Also Wednesday, the court heard testimony from James Holden, who was dismissed as Chrysler's president in 2000. Mr. Holden, who helped negotiate the DaimlerChrysler combination, defended the deal as a "merger of equals" that paid "an appropriate premium to our shareholders."

The comments came in response to questions from Judge Joseph Farnan, who will decide the case. The judge's questions to Mr. Holden were his first direct questioning of a witness in the three-day trial.

Mr. Holden, who gave a lengthy discussion of auto-industry economics, said the merger left Chrysler in a better position today than it would be in if it had stayed independent.

"I think there would be an even bigger struggle going on today," he testified, noting that it takes "deep pockets" to come up with new products and to survive in an economic downturn. Chrysler, hard-hit by the U.S. industry's price war, is straining to break even this year.