A court in Germany ordered DaimlerChrysler on Aug.21 to pay $300 million in compensation to former shareholders of Daimler-Benz in a legal battle over terms of its 1998 merger with U.S. car maker Chrysler.
The district court of Stuttgart ordered DaimlerChrysler to pay 22.15 euros (US$28.63) in cash per share to holders of around 10.5 million shares after finding that Daimler-Benz shares were undervalued in the multi-billion-dollar mega deal, a court spokesman said.
As part of the 1998 merger, which was effectively a takeover of Chrysler by Daimler-Benz, the German carmaker forced shareholders to exchange their shares for new shares in the merged entity. But 17 shareholders appealed against the terms of the swap, which they argued did not value their shares highly enough. The court found in their favor.
DaimlerChrysler said it would appeal the ruling, arguing there was no justification in awarding compensation.
The takeover of Chrysler by Daimler was officially presented as a "merger of equals". But various shareholders on either side have disagreed and filed complaints against the terms of the deal.
U.S. investor Kirk Kerkorian, for example, who was a major shareholder in Chrysler at the time, felt he was short-changed by the merger and has filed for $ 1 billion in compensation.
Copyright Agence France-Presse, 2006
