updated 4/28/2005 2:20:04 PM ET 2005-04-28T18:20:04

Billionaire investor Kirk Kerkorian on Thursday appealed a federal judge's rejection of his claims that he was defrauded in the 1998 merger of DaimlerBenz and Chrysler Corp.

Kerkorian sued DaimlerChrysler AG in 2000, claiming that DaimlerBenz engineered a takeover of Chrysler, then cheated him out of billions by casting the deal as a merger of equals.

Kerkorian, whose wholly owned Tracinda Corp. was Chrysler's largest shareholder at the time, alleged that DaimlerBenz saved billions on the transaction price by not pursuing a true acquisition of the company. DaimlerChrysler insisted that the business combination was a merger of equals and that Kerkorian grew disgruntled when the stock price fell.

U.S. District Court Judge Joseph Farnan Jr. ruled against Kerkorian earlier this month, following a 13-day bench trial in Wilmington, Delaware, that ended in February 2004.

Terry Christensen, a Los Angeles attorney representing Tracinda, said Farnan erred in agreeing with DaimlerChrysler's claim that representations by Daimler and Chrysler executives that the transaction would be a merger of equals and that the new company would be jointly managed were good only up to the point when shareholders had voted and the merger closed.

In his lawsuit, Kerkorian relied heavily on a 2000 interview with The Financial Times of London in which DaimlerChrysler Chief Executive Juergen Schrempp said the German-heavy management of DaimlerChrysler was what he always envisioned, and that the combination of the companies was billed as a merger of equals "for psychological reasons."

"We disagree with the court's ruling that representations made to Tracinda and other Chrysler shareholders in the proposed merger with Daimler-Benz were required to be good only for a moment in time and believe the court's decision conveys the wrong message to the investment community and shareholders of public companies," Christensen said in a prepared statement. "If that analysis were correct, no shareholder could rely on any statement about any transaction, whether made in a proxy statement or otherwise, to be accurate after the shareholder vote and the transaction closed."

"We believe this issue is larger than the dispute between Tracinda and DaimlerChrysler and for that reason, Tracinda has appealed," Christensen said, adding that Tracinda also is appealing the denial of its right to a jury trial.

DaimlerChrysler spokesman Han Tjan described the appeal as "a futile effort."

J. Michael Schell, lead attorney for DaimlerChrysler, said Tracinda's case had no merit, and that he expects Farnan's 123-page opinion to be upheld by the 3rd U.S. Circuit Court of Appeals in Philadelphia.

"The U.S. District Court found no factual or legal basis for Tracinda's claims and an appeal will not change that," Schell said.

"Apart from devastating Tracinda's case, we think the opinion is virtually bulletproof," he said. "Nevertheless, we will give it a most vigorous defense."

While defeating Kerkorian's claim, DaimlerChrysler agreed in August 2003 to pay $300 million to settle a $22 billion class-action lawsuit filed by other investors who also claimed they were misled.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Discussion comments


Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 3.79%
$30K home equity loan FICO 4.99%
$75K home equity loan FICO 4.69%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.83%
Cash Back Cards 17.80%
Rewards Cards 17.18%
Source: Bankrate.com