Former Executive Says Chrysler Hit 'Home Run' in Merger

WILMINGTON, Del. February 10, 2004; Peg Brickley writing for Dow Jones reported that former Chrysler Corp. Chief Financial Officer Gary Valade said Tuesday negotiators for the Michigan automaker got the price they wanted in the deal that combined Chrysler and Daimler-Benz AG of Germany.

On the stand as the trial of billionaire investor Kirk Kerkorian's lawsuit nears its end, one of the last former Chrysler executives to leave DaimlerChrysler AG defended the company against charges it duped Chrysler shareholders.

Instead of getting a takeover premium for their shares, Chrysler stockholders took the lower price appropriate to a "merger of equals," Mr. Kerkorian's lawsuit says.

According to Mr. Valade, Chrysler negotiators calculated that a price of $ 57.50 a share was the best they would be able to get from Daimler-Benz shareholders. He went on to say Chrysler got its target price in deal negotiations with Daimler-Benz Chief Executive Juergen Schrempp, adding, "I think $57.50 was basically a home run."

With Mr. Valade on the stand, attorneys for Mr. Kerkorian replayed the audiotape of the October 2000 Financial Times interview that triggered lawsuits from Mr. Kerkorian and other shareholders. Mr. Schrempp told the Financial Times he had always intended to make Chrysler a division of a larger company, but had to go about the deal in a "roundabout" way for psychological reasons.

In answer to questions from DaimlerChrysler attorney Rob Saunders, Mr. Valade said he would have continued pushing for the deal if he had seen Mr. Schrempp's statements during negotiations in 1998.

The question of what Chrysler negotiators would have done had they concluded Mr. Schrempp had a secret takeover plan could be a key one in the case. U.S. District Judge Joseph Farnan, who is presiding over the trial, has asked similar questions himself, as a parade of former Chrysler chiefs -- two of them ousted after the merger -- took the stand.

After hearing the tape of the interview for the first time, Mr. Valade said Mr. Schrempp's apparent admission he had hidden his future strategy to get the deal done was "in a sense not relevant." Mr. Valade echoed Mr. Schrempp's explanation that he was using psychology on Chrysler workers, but not on shareholders or top executives who negotiated the deal.

One of Chrysler's lead negotiators, Mr. Valade survived longer at DaimlerChrysler than most of the Michigan auto maker's top executives. His retirement in December left a single former Chrysler executive on a management board dominated by veterans of Daimler-Benz.

Kerkorian attorney Terry Christensen quizzed Mr. Valade on his personal profits from the 1998 merger. Mr. Valade said he received something less than the $22 million in accelerated stock rights that the proxy sent to shareholders described.

The trial, which was expected to end Tuesday, is likely to stretch into Wednesday, according to DaimlerChrysler lawyers.