DaimlerChrysler's Schremp Under Questioning In KK Suit

WILMINGTON, Delaware December 10, 2003; Randall Chase writing for the AP reported that DaimlerChrysler AG chairman Juergen Schrempp took the stand again Wednesday, saying comments he made in a 2000 interview were an attempt to move past discussing the merger with Chrysler and on to talking about the combined company.

However, Schrempp said he also was trying to convey that it was time to focus on assimilating Chrysler as an operating division. He admitted that had executives talked about Chrysler being an operating division of Daimler Chrysler, similar to the Mercedes car and truck divisions, Chrysler employees would not have supported the merger.

"What I'm saying here is that we shifted the emphasis of communication," Schrempp said during questioning by a DaimlerChrysler attorney.

Attorneys for billionaire investor Kirk Kerkorian were expected to question Schrempp later Wednesday, the seventh day of the trial. Kerkorian is suing for more than $1 billion in compensatory damages from DaimlerChrysler, claiming Daimler-Benz falsely characterized a takeover as a "merger of equals." DaimlerChrysler maintains Kerkorian supported the deal and grew disgruntled only when his shares lost value.

Kerkorian's Tracinda Corp. was the largest Chrysler shareholder at the time of the 1998 merger. He claims Daimler-Benz avoided paying him an acquisition fee of up to 62 percent on his shares when the companies merged. Kerkorian did make $2.7 billion in other fees when the companies merged.

The 2000 interview with the Financial Times has become a key issue in the suit. In the article, Schrempp said the deal was billed as a merger of equals "for psychological reasons" and described Chrysler as a "division" of the company.

Schrempp said he was simply trying to assure the world that Daimler Chrysler was trying to a get a handle on problems at Chrysler.

Schrempp said he "never, ever intended to do anything else but what was negotiated and contained in the business combination agreement."

"The media and the world were talking about the merger not being successful, we had to tell the world what we were doing to handle the operating problems," Schrempp said.

Schrempp maintained the deal was merger of equals and not a takeover, but also drew a distinction between Chrysler's status as a corporate entity and as an operating division of DaimlerChrysler, much like its Mercedes car and truck divisions.

"I was sitting there very concerned about the development of Chrysler ... it was clear to me that something very drastic had to happen," Schrempp said of the interview.

In hindsight, Schrempp said he still believes the merger was a good idea.

"I'm firmly convinced that only by merging these two great entities on an equal basis and learning how to do it ... we will eventually get this company to be No. 1 ... this merger made sense, this merger of equals was correct."