Judge: Company didn’t deceive Kerkorian

Friday, April 8, 2005 | 9:36 a.m.

Daimler-Benz AG didn't fraudulently disguise the takeover of Chrysler Corp. as a merger, a judge ruled, rejecting billionaire investor Kirk Kerkorian's claim he was duped about the 1998 deal that formed DaimlerChrysler AG.

U.S. District Judge Joseph J. Farnan Jr. in Wilmington, Delaware, said Kerkorian, once Chrysler's largest shareholder, was a "sophisticated investor" who should have known that a description of the transaction as a "merger of equals" was just a "promotional phrase" that was "too vague" to sustain a suit.

Farnan, in a 123-page opinion released Thursday, said Kerkorian "wouldn't have reasonably relied on" those oral representations for "such a complex, multibillon-dollar transaction." Kerkorian, 87, sought as much as $3 billion for losses tied to the $36 billion deal. Shares of DaimlerChrysler, the world's No. 5 carmaker, have lost more than half their value since the takeover.

"The lesson here is that securities laws are set up to protect Ma and Pa investors, not sophisticated guys like Kirk Kerkorian, who have the wherewithal to check out these companies and these transactions before they get involved," said Robert Zito, a New York-based lawyer who defends large corporations.

Kerkorian's case failed because he couldn't show that he'd backed the deal because of Daimler-Benz and Chrysler officials' assurances that the combination was a true merger, Zito said.