The appeals court has overturned a ruling that awarded 230 million-euro ($324 million) to former Daimler-Benz AG shareholders who claimed to not being adequately compensated in the 1998 merger with Chrysler Corp.
In an Oct. 15 e-mailed statement, the Higher Regional Court in Stuttgart, Germany, said that the shareholders' interests were taken care of when the companies negotiated the deal, which gave 1.005 shares of DaimlerChrysler AG for each share of the old Dailmer-Benz AG.
The court said that shareholders at a Daimler-Benz meeting approved the merger by an overwhelming margin.
The court said that the agreement was entered after a negotiation process that is supported by a large majority of shareholders – which the court described to the “best warranty that the executives took adequate care of the economic interests of their respective investors.” The ruling also stated that in these cases, a court has “only limited powers of review.”
This suit had originated from a conflict linked to the $36 billion takeover of Chrysler, which created DaimlerChrysler AG.
In 2007, the merger was unwound with the sale of 80.1% of the US division to Cerberus Capital Management LP. Later, Daimler dropped “Chrysler” from its name. Chrysler filed for bankruptcy last year and a government-sponsored reorganization permitted Italy's Fiat S.p.A. to take over the automaker.
The tribunal's decision overturned a lower court ruling that gave investors an additional 22.15 euros per share. During a 2008 court hearing, CEO Juergen Schrempp denied claims that Daimler-Benz downplayed its value during the 1998 merger negotiations with Chrysler to facilitate the transaction. [via autonews - sub. required]