NPC: DaimlerChrysler CEO "grilled" in court about merger.

[Alfred1]

I, personally, never understood the need for such a merger between two total opposites in the car industry.


Lawsuit trial focuses on automaker's location
February 10, 2004

BY SARAH A. WEBSTER
FREE PRESS BUSINESS WRITER

WILMINGTON, Del. -- Lawyers for billionaire investor Kirk Kerkorian grilled DaimlerChrysler AG Chief Executive Officer Juergen Schrempp for several hours in U.S. District Court Monday over notes that seemed to catch the automotive leader in important contradictions -- such as whether the merged company had to be based in the United States or in Germany.

The late arrival of more than 60 pages of previously undisclosed notes, taken by Gary Valade, Chrysler's former chief financial officer, brought the nearly three-week trial to a halt in December. Schrempp, who had already testified for three days, was the first witness to be recalled when the proceedings resumed on Monday.

Kerkorian's lawsuit against the global automaker claims the so-called merger of equals between Daimler-Benz AG and the Chrysler Corp. in 1998 was actually a secret takeover that cheated him and other shareholders out of billions of dollars. He is asking for at least $1 billion and nullification of the deal.

Kerkorian lawyer Terry Christensen seized on what seemed to be the most important discrepancy between Schrempp's prior testimony and the notes: the issue of whether he wanted the new company to be incorporated in Germany, the United States or elsewhere.

DaimlerChrysler, of course, was eventually incorporated in Germany -- as what is called an AG, the equivalent of the U.S. Inc. Kerkorian's lawyers said that deft move gave Daimler executives an upper hand when they decided to fire American Chrysler executives and put their own officials in charge in November 2000, two years after the deal was finalized and the automaker's finances had soured.

Varying views
Schrempp has now offered several differing views on how he wanted the company formed. In his December testimony, and even earlier Monday, Schrempp said the new company had to be German.

"If it was not AG, we will not have a deal," he said Monday, nearly echoing his previous remarks.

At times, Schrempp also has testified that he didn't care where the company was incorporated and said that ultimately lawyers were the ones who concluded that Germany was the best location to incorporate, for tax reasons.

Later, however, Christensen confronted Schrempp with Valade's notes, which said: "Schrempp -- prefer to make Inc." but was under "political pressure" to make it German.

That caused Schrempp to apparently shift gears again.

"I would have loved to have the company incorporated in the United States," he testified. "It could have happened. . . . I would have presented a case."

Kerkorian's lawyers say the notes show that Schrempp was willing to say just about anything to close the $36-billion transatlantic deal, the largest in automotive history.

Valade's notes, which span from at least February 1998 until the deal was publicly proposed on May 7, characterize Schrempp as enthusiastic and "fired up" at times. One of several themes throughout the notes is Schrempp's desire to be nearly certain that the deal would be approved before a proposal was announced publicly and put before shareholders.

On Monday, Schrempp also testified that he was willing to resign to make the deal work, a statement that shows a strong desire to close the deal but also seems to contradict the Kerkorian team's portrayal of him as a power-hungry manipulator.

"I said that, if necessary, I would step down," Schrempp said.

The issue of where the company incorporated seemed to weigh more heavily on the minds of Chrysler executives than such leadership questions, according to the notes, which have numerous pages analyzing the different incorporation possibilities.

"We have come to realize that internally, it would be very difficult to become a German company and sell this as a 'merger of equals,' " one page of the notes said.

Less confident
When Schrempp testified in December, the chairman was confronted with what is arguably the most explosive evidence in the case: a 2000 tape recording that seems to catch him boasting about how he closed the deal by not being forthright and then turned Chrysler into a division of the new auto company.

After being confronted by that evidence, Schrempp charged confidently out of the courtroom, stopping to tell reporters he had "no regrets" about the 1998 merger of Daimler-Benz AG and the Chrysler Corp.

The Valade notes are not as critical as that tape-recorded evidence, one of Kerkorian's lawyers said. But they are key in capturing what Schrempp and other Daimler officials promised during the negotiations in order to close the deal, such as a 50-50 partnership.

So this time when he left the courthouse about 3 p.m. Monday, Schrempp seemed less sure of himself. When reporters asked about his testimony, he did not stop to talk. While rushing to a nearby Dodge Durango, he shrugged his shoulders as if he wasn't certain and blurted, "I think I did good."

Testimony in the case is expected to conclude late today, and Judge Joseph Farnan Jr. will decide the case in lieu of a jury later this year, after lawyers have filed closing briefs.


Contact SARAH A. WEBSTER at 313-222-5394 or swebster@freepress.com.

http://www.freep.com/money/autonews/dcx10_20040210.htm

[Mike Kunz]

uh...and what does this have to do with a 914?

[Alfred1]

Originally posted by Mike Kunz
uh...and what does this have to do with a 914?

Nothing. That's why there was "NPC" in the subject heading.