DaimlerChrysler CEO Juergen Schrempp testified on Wednesday that the 1998 combination of Chrysler and Daimler-Benz was a merger of "two great entities on an equal basis," as he rejected fraud charges for the second straight day.
"I never, ever intended to do anything else other than what we negotiated and is contained in the business combination agreement," Schrempp said in U.S. District Court in Wilmington, Delaware.
Schrempp, mastermind of the $36 billion deal creating DaimlerChrysler, is accused of fraud by billionaire investor Kirk Kerkorian, who claims that Germany's Daimler-Benz dishonestly characterized a takeover of the No. 3 U.S. automaker as a merger.
The distinction is important because shareholders are entitled to a "change of control" premium in takeovers, as opposed to mergers.
Kerkorian, who owned nearly 14 percent of Chrysler and is seeking more than $1 billion in damages, contends that Schrempp and other Daimler executives lied about their intentions to lower the transaction price.
But in line with his testimony on Tuesday, the head of Germany's largest industrial company denied any wrongdoing.
Kerkorian's case rests largely on an October 2000 interview Schrempp gave the Financial Times in which the German auto boss appeared to suggest that the deal was only billed a merger of equals for "psychological reasons" and said he always intended to make Chrysler a "division" of the combined company.
But Schrempp defended his remarks to the newspaper, saying he had sought to stress that DaimlerChrysler was "an international, integrated automotive company" with two distinct operating divisions including Daimler-Benz.
He acknowledged that he had avoided using the term "division" before the Financial Times interview, something that could strengthen Kerkorian's claim that details of the Chrysler acquisition were withheld to appease shareholders.
"When you go out and loosely say that Chrysler would become a division of DaimlerChrysler we would have had tremendous problems with our people. I believe it was right the way we did it," Schrempp said.
Shares of DaimlerChrysler have fallen more than 50 percent since the November 1998 deal orchestrated. But Schrempp, 59, said he voiced no regrets about forming the world's fifth-largest automaker.
He said he was now "firmly convinced" that "only by merging these two great entities on an equal basis are we able to get this company to be No. 1."
