German Court Rules Daimlerchrysler Must Pay Additional 22.15 Euros Per Share Tendered By Original Investors

STUTTGART, Germany, Aug 21, 2006; Reuters reported that a German court has ruled that DaimlerChrysler should pay former shareholders of Daimler-Benz AG more money in a dispute over the valuation of their stock during the 1998 merger with Chrysler.

The Stuttgart court decided that the world's fifth-biggest carmaker should pay an extra 22.15 euros per share to investors who were forced to tender their stock for the merger, a court spokesman said.

DaimlerChrysler had opposed an earlier proposal that it settle the case by paying the investors an extra 19 euros per share, or nearly 200 million euros ($256.7 million).

DaimlerChrysler had no immediate comment.

Its shares fell as low as 40.33 euros before recovering somewhat to trade down 0.6 percent at 41.18 euros by 0937 GMT, while the DJ Stoxx European car sector index <.SXAP> retreated 0.6 percent.

"Let's say this (payment) is 230 million euros. Even if they have made no reserves -- and I imagine they have already covered the bulk of this with reserves -- and the entire sum has a negative impact on earnings, you get to 23 cents per share and that is not really significant," said DZ Bank analyst Tim Schuldt.

A Frankfurt share trader agreed.

"At first glance it was negative of course. At second glance it was of negligible value," he said. Holders of 1.8 percent of Daimler-Benz shares exchanged their stock involuntarily and some of them sought compensation in 1999, contending the ratio used in the exchange did not properly value their stock.

DaimlerChrysler has insisted the exchange ratio was fair.

DZ's Schuldt said he did not think the case would have any impact on a pending U.S. lawsuit by billionaire investor Kirk Kerkorian over how the merger was handled.

Kerkorian has appealed against a U.S. court ruling dismissing his $1 billion lawsuit that accused Daimler-Benz of misrepresenting the deal as a merger rather than a takeover.

Kerkorian was Chrysler's largest investor the time of the link-up. He contends that Juergen Schrempp, DaimlerChrysler's former chief executive, only called the transaction a merger of equals to lower the price and avoid paying a control premium.

A U.S. federal court judge in Delaware ruled against Kerkorian in April 2005, saying Kerkorian and his Tracinda Corp investment firm were sophisticated investors who should not have been misled by the way Schrempp pitched the deal.