DaimlerChrysler Hit With $9B Lawsuit

D E T R O I T, Nov. 28 -- With its Chrysler division posting a $512 millionloss in the third quarter and expecting more steep losses nextyear, DaimlerChrysler AG is facing yet another headache: a $9billion lawsuit from investor Kirk Kerkorian.

In the suit filed Monday, the billionaire seeks to undo the 1998merger between Daimler-Benz AG and Chrysler and accuses chairmanJuergen Schrempp of lying to Chrysler shareholders.

Officials from Tracinda Corp. — Kerkorian’s investment firm —said Kerkorian would have never voted for the $32.8 billion deal ifit had been pitched as a German takeover rather than the “mergerof equals” that Schrempp and former Chrysler chairman Robert Eatonhad billed.

3rd-Largest Shareholder

Kerkorian, who launched a hostile takeover bid for Chrysler in1995 that led to a seat on Chrysler’s board, is DaimlerChrysler’sthird-largest individual shareholder with about 4 percent of itsshares. At the time of the merger, he was Chrysler’s largestshareholder with 13.75 percent of its shares.

Kerkorian also is the majority shareholder in MGM Mirage Inc.,the Las Vegas-based entertainment, hotel and gaming behemoth formedearlier this year by MGM Grand’s $6.4 billion buyout of MirageResorts.

“To close one of the largest transactions in the history of theautomotive industry, defendants Daimler-Benz AG and DaimlerChryslerAG blatantly lied to all concerned in a scheme masterminded bydefendant Juergen Schrempp,” the complaint said.

DaimlerChrysler AG officials said in a statement that theallegations “appear to be completely without merit,” but addedthey had not seen the lawsuit and declined further comment.

Also Seeking Chrysler Independence

Kerkorian seeks more than $2 billion in actual damages, $1billion in damages for the drop in value of the DaimlerChryslershares since the merger and punitive damages of at least $6billion. Tracinda also said it “seeks to unwind the transaction sothat Chrysler will once again be an independent corporation ownedby Chrysler shareholders.”