>
> :
>
> Billionaire says officials misled him on DaimlerChrysler deal
>
> Kerkorian claims he was duped
>
> By Ed Garsten / The Detroit News
>
>
> WILMINGTON, Del. -- Billionaire casino mogul Kirk Kerkorian testified
> Tuesday that he never would have voted for the 1998 merger of Chrysler and
> Daimler-Benz AG if it were not structured as a "merger of equals."
>
> Kerkorian said he voted for the union solely on the word of former
> Chrysler Chairman Robert Eaton and later felt that Daimler-Benz executives
> misled shareholders about the true nature of the deal.
>
> Kerkorian's charges spilled out over 5 1/2 hours of fiery testimony during
> the trial of his lawsuit against DaimlerChrysler AG
> <Javascript:companybox('DCX')> in U.S. District Court. A federal judge
> will decide whether Kerkorian and other shareholders were deprived of a
> premium for the stock because the $36 billion deal was sold as a "merger
> of equals" rather than a takeover.
>
> "(Eaton) was my only contact at Chrysler," Kerkorian said. "I had a good
> relationship with Mr. Eaton before and after the merger. I trusted him
> completely."
>
> The tan, salt-and-pepper-haired 86-year-old remained stonefaced for the
> first hour of direct testimony, but became combative under tough
> questioning from a DaimlerChrysler attorney.
>
> As the former Chrysler Corp.'s biggest shareholder at the time of the 1998
> deal, Kerkorian's votes were necessary to approve the merger. He testified
> that he would not have voted for anything other than a merger of equals.
>
> But Kerkorian said he felt deceived after learning of an October 2000
> interview published in the Financial Times that quoted DaimlerChrysler
> Chairman Juergen Schrempp as saying the goal all along was a Chrysler
> takeover.
>
> "I was very, very surprised, very, very upset by it," said Kerkorian, who
> wore a light gray suit and slate blue patterned tie. "There was deception.
> I got more upset when (Chrysler CEO Jim) Holden was fired. Then two people
> came from Stuttgart and just took over Chrysler."
>
> Kerkorian was referring to Chrysler Chief Executive Dieter Zetsche and
> Chief Operating Officer Wolfgang Bernhardt, former Mercedes-Benz
> executives who were sent to Auburn Hills to revive financially strapped
> Chrysler in November 2000.
>
> Kerkorian is suing DaimlerChrysler for $3 billion, claiming he was duped
> into approving a merger that was actually a takeover. In the event of a
> takeover, shareholders typically are paid a premium for their shares.
>
> Throughout the day Tuesday, Kerkorian's attorneys worked to establish that
> the financier's lawsuit was based on a fraudulent breach of trust, while
> DaimlerChrysler lawyers tried to push Kerkorian to admit that his lawsuit
> was driven primarily by greed.
>
> Ruffled feathers
> Kerkorian became argumentative during a lengthly cross-examination by
> Jonathan Lerner, DaimlerChrysler's lead attorney. Lerner was trying to
> establish that the financier's lawsuit stemmed from ruffled feathers after
> a bruising battle in the mid-1990s to force Chrysler to buy back some of
> its stock in order to prop up share values.
>
> "You know, Jonathan, you're on the wrong track," Kerkorian said, nearly
> growling. "If you're not getting tired of it, I am."
>
> At one point while under cross-examination, Kerkorian appealed to his
> attorney.
>
> "Terry, this thing's getting out of line," he barked to Christensen.
> "You're representing a client involved in deceit and fraud, and they're
> accusing me of the same and I don't like it."
>
> An impassive U.S. District Judge Joseph Farnan Jr. allowed the tirades,
> making no attempt to reel in the witness.
>
> Under cross-examination, Kerkorian said he paid little attention to advice
> from Jerry York, the vice chairman of his investment firm, Tracinda Corp.,
> to advocate the merger, listening only to Eaton. York was a former
> Chrysler chief financial officer.
>
> He said correspondence to Chrysler signed by him -- which threatened proxy
> fights in order to pressure the automaker into a buyout by Tracinda and
> later to force the stock buyback -- were not written by him.
>
> "That's trash talk written by counsel," Kerkorian explained. "We were in a
> fight."
>
> In fact, the entrepreneur said he rarely read correspondence, reports or
> business offerings in full.
>
> "I have a different style of running a business. I don't read everything,"
> he explained.
>
> Indeed, more than a dozen times when Lerner asked Kerkorian to
> authenticate documents, he responded he didn't recall and gave what became
> a stock line: "If that's what it says, let's assume it's correct and move
> on."
>
> Kerkorian lost the takeover bid, which he attempted with former Chrysler
> Chairman Lee Iacocca, but prevailed in the 1996 buyback fight.
>
> Merging possibilities
>
>
>
> Kerkorian and Eaton became estranged during the buyback battle, he said,
> but grew close again afterward, speaking frequently about the possibility
> of merging Chrysler with another company.
>
> An analysis by York suggested Daimler-Benz, because it was more
> "worldwide," Kerkorian said. But he was swayed only by Eaton's enthusiasm
> for the same deal, because his trust for him had not diminished.
>
> At all times, he said, Eaton told him it would be a merger of equals.
> Eaton is due to testify Thursday.
>
> "When you hear Eaton, it'll sound like a contest of who was more
> enthusiastic about the deal," Christensen said in an interview at the
> close of Tuesday's session.
>
> Kerkorian will return to the witness stand this afternoon, after testimony
> by Holden.
>
> The unorthodox schedule was worked out by attorneys to accommodate both
> witnesses' schedules and to give Kerkorian a longer respite after what his
> lawyer called a "grueling" day.
>
> It's not often that a billionaire testifies in court, but Kerkorian's
> appearance did not draw a big crowd in this town that is used to
> high-profile corporate civil suits.
>
> Many companies incorporate in Delaware because of tax considerations and
> favorable laws that give corporate directors increased power.
>
> Spectators first quietly gasped, then laughed, as Kerkorian continued to
> make opposing counsel's life miserable.
>
> "I think you're getting pretty testy," he said at one point to Lerner.
>
> "You're going back and forth. Why don't you stay on a course?" he added a
> few minutes later.
>
> Lerner remained polite and told Kerkorian he was just a "working stiff"
> trying to ask a few questions.
>
>
>
> You can reach Ed Garsten at (313) 223-3217 or egarsten@xxxxxxxxxxxx
> <mailto:egarsten@xxxxxxxxxxx>
>
>
>
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