The 1998 merger of Daimler-Benz and Chrysler was good for both firms, DaimlerChrysler chairman Juergen Schrempp said in the latest round of a high-profile trial.
The 1998 merger of Daimler-Benz and Chrysler was good for both firms, DaimlerChrysler chairman Juergen Schrempp said in the latest round of a high-profile trial.
Testifying on his second day, Schrempp countered allegations he and other executives tricked shareholders into accepting a stock-for-stock deal allegedly worth R38 to R57 billion more than was paid.
Kirk Kerkorian, a Las Vegas casino tycoon, is seeking R7,6 billion in damages, contending that a change-of-control takeover would call for a higher price than a merger of companies as equals.
Schrempp said the executive moving from a 50-50 DaimlerChrysler Management Committee to an eight to one ratio that favoured former Daimler-Benz appointees over Chrysler executives was “evolution” of an integrated company based on skill and not nationality.
“I do not think it would be fair to think of nationality when we are trying to run an international automotive company and trying to do the best job,” he said.
The German is a key witness in the case brought by US billionaire Kirk Kerkorian and his investment company, Tracinda Corporation. Kerkorian has accused the German firm of engineering a takeover of the US automaker while calling it a “merger of equals.”
Schrempp said that although the 1998 deal was a merger of equals that was now in the past and the company had to adapt to the marketplace.
“This is a dynamic company that has to react to changes,” he said. “We have an integrated automotive company where we do not talk about ‘merger of equals’ today. The merger of equals was done … and we are now DaimlerChrysler, an international automotive company.”
Asked about a 2000 interview in the Financial Times that is central to the case, Schrempp said the newspaper “totally misrepresented what I said” by implying a secret takeover plan.
The Financial Times had quoted Schrempp as discussing a “roundabout” way to gain control of Chrysler and make it one of several “divisions” of the German firm.
In court, Schrempp said there was nothing unusual about making Chrysler one of the divisions of the firm, along with the divisions of the old Daimler-Benz group.
However, Schrempp did say that the plan to make Chrysler a division was not spelled out in the merger plan. “We were concerned that a misconception would occur” among Chrysler employees, he said.
Schrempp admitted that the merger had not yet been financially successful, and could take 10 more years to do so since stock prices had dropped since the merger.
