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Following the lead of billionaire investor Kirk Kerkorian, three law firms representing disgruntled DaimlerChrysler AG shareholders filed class-action suits against the Stuttgart, Germany-based automaker Nov. 29. Claiming Daimler mislead Chrysler shareholders about the $34 billion merger of the companies being one of equals, the three New York law firms — Milberg Weiss Bershad Hynes & Lerach LLP, Wolf Haldenstein Adler Freeman & Herz LLP and Schoengold & Sporn PC — filed separate suits in U.S. District Court for the District of Delaware. “I wouldn’t be surprised if there are more suits filed,” said Steven Schulman, a partner at Milberg Weiss. “Had Chrysler’s board known that [Daimler CEO] Jurgen Schrempp wanted to change the dynamics, then the board could have made a more informed decision.” Kerkorian, whose Tracinda Corp. owns 4% of the carmaker, filed an $8 billion lawsuit against DaimlerChrysler Nov. 27. Kerkorian’s suit charges that DaimlerChrysler and the company’s top executives engaged in “calculated lies” and mismanagement and are the cause of a significant drop in shareholder value. The suit also asserts that DaimlerChrysler’s treatment of Chrysler as a subordinate division has contributed to the company’s declining market capitalization and to the “purge” of long-term Chrysler executives. Sparking the lawsuits was an Oct. 30 article in London’s Financial Times in which Schrempp acknowledged that had always planned for Chrysler to be a stand-alone division. “Me being a chess player, I don’t normally talk about the second or third move,” the FT quoted him as saying. “The structure we have now with Chrysler [as a stand-alone division] was always the structure I wanted. We had to go a roundabout way, but it had to be done for psychological reasons.” In addition, he said: “If I had gone and said Chrysler would be a division, everybody on their side would have said: ‘There is no way we’ll do a deal.’ But it’s precisely what I wanted to do.” Shortly after the FT interview, DaimlerChrysler discharged Chrysler’s top management, assigning Dieter Zetsche as president. Three assembly plants have also been temporarily shut down, and rumors have surfaced about imminent job cuts. The DaimlerChrysler group, since the merger, has acquired significant holdings in Japan’s Mitsubishi Motors Corp. and South Korea’s Hyundai Motor Co., as well as taking control of U.S. engine maker Detroit Diesel Corp. and Canadian truckmaker Western Star. Some analysts think Kerkorian and the law firms filing the suits smell a chance to make all of their Chrysler problems go away by exerting pressure on Schrempp. “Kerkorian is very clever at this,” said Sam Valenti, president of Valenti Capital in Detroit. Other major shareholders, Deutsche Bank AG and the Kuwaiti Investment Authority, have not joined any suits or filed any. If cultural gaps are breaking down in the face of globalization, DaimlerChrysler is one example of just how far there is yet to go. “There are very few international mergers of this size that go smoothly,” Valenti said. DaimlerChrysler, which could not be reached for comment, said in a statement that it does not believe Tracinda has reason to file a suit. The company said in a separate statement Nov. 29 that its Chrysler Deutschland GmbH unit plans to end its contracts with Chrysler and Jeep dealerships by Dec. 31, 2002. Shares of DaimlerChrysler closed down 1.1% Wednesday at $39.08 on the New York Stock Exchange. Copyright (c)2000 TDD, LLC. All rights reserved.

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