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Daimler takes new hits
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November 29, 2000: 5:47 p.m. ET
Faces 2 new U.S. suits and calls from German critics for chairman's removal
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NEW YORK (CNNfn) - Criticism of DaimlerChrysler mounted on both sides of the Atlantic Wednesday, although one German member of the shareholder board attacked the critics, saying Chrysler Corp.'s stock would be worthless today without the 1998 merger.
Shareholder suits seeking class action status were filed in U.S. District Court in Delaware, where an $8 billion suit was filed Monday on behalf of Kirk Kerkorian, the company's leading U.S. shareholder.
 Two leading shareholder-rights activists in Germany told Reuters they supported removal of Jeurgen Schrempp, the company's chairman.
Thomas Froehlich, a spokesman for DaimlerChrysler, said the company had no comments on the new German criticism of Schrempp. He said that additional shareholder lawsuits are not unusual once a suit has been filed, but that the company had yet to see the new suits and had no comment on them. The company maintains that Kerkorian's suit is without merit.
New suits seek unspecified damages
The new suits seek unspecified damages on behalf of a broad class of shareholders who sold their Chrysler shares to DaimlerChrysler for shares in the combined company. Losses in the Chrysler unit and an exodus of top Chrysler veterans from the company has been accompanied by a steep drop in stock price in the last year, leaving the market value of the combined company barely above the $38 billion value of Chrysler Corp. at the time of the deal.
One of the suits, filed Tuesday by Milberg Weiss Bershad Hynes & Lerach, does not mention a possible unwinding of the merger. The other suit, also filed Tuesday, by Wolf, Haldenstein, Adler Freeman & Herz, does seek to undo the deal. Jeffrey G. Smith, the Wolf, Haldenstein attorney who filed a suit on behalf of Philadelphia attorney Stanley Kops, acknowledged in an interview that the remedy of undoing the merger, while possible, is unlikely.  "That's an extraordinary remedy, so we're also requesting monetary damages," he said.
Smith said while his firm had been looking at a possible shareholder suit against DaimlerChrysler before Monday's action by Kerkorian's investment firm, Tracinda Corp., "It was the announcement of Mr. Kerkorian's suit that prompted Mr. Kops' interest."
Kerkorian's attorney, Terry Christensen, said Wednesday that he had heard of three other shareholder lawsuits that had been filed in federal court Wednesday. He said the new suits are a double-edged sword for Kerkorian's efforts.
"I think it's appropriate, because what happened to us happened to all the shareholders," he said of the new litigation. "My only concern is that I hope this doesn't slow us down and turn it into a multi-year protracted litigation. I don't really want this to be something that hangs over DaimlerChrysler for a long time."
Christensen said a number of institutional shareholders had called to voice support for Kerkorian's suit, but that support has little impact on the outcome of the legal action, since none would be joining the suit and there are no proxies being sought.
"We appreciate the expression of goodwill," he said. "Public opinion will be important for about a month. Then we go to work and the facts are the facts and the law is the law and it'll all come out in the end."
One of the institutional shareholders to voice support for Kerkorian is New York portfolio manager Glickenhaus & Co.
Seth Glickenhaus, a partner with the firm, told CNNfn Wednesday that his firm has yet to decide whether to join Kerkorian's suit, join one of the class action suits, or pursue its own legal action.
While he would not identify the firm's holdings in DaimlerChrysler, Glickenhaus said they owned millions of shares of Chrysler Corp. at the time of the merger and said their current holdings are still substantial.
German critics call for Schrempp's removal
Reuters reported that Reinhild Keitel, a leading member of Germany's Association for Protection of Small Shareholders, joined the chorus of criticism of DaimlerChrysler Wednesday, calling for the removal of Schrempp, who engineered the merger as well as the replacement of top U.S.-based executives with German managers.
Recent statements by Schrempp that he always intended to have Chrysler function as a division in the company rather than as an equal partner to Daimler Benz has prompted the criticisms and suits.
 "I think after the disaster at Chrysler and the consequences for German shareholders, that [Schrempp] should think seriously about resigning," Keitel said.
Economics professor Ekkehard Wenger, a leading German shareholder activist and an outspoken critic of the 1998 merger, said he planned to call for the dismissal of Schrempp and supervisory board head Hilmar Kopper, who represents DaimlerChrysler's biggest shareholder, Deutsche Bank AG, at the next annual shareholder meeting.
But Schrempp also picked up some support from German shareholders. Klaus Nieding of Germany's Association for Securities Investment, a shareholder rights protection lobby, argued Wenger's call would be premature, but agreed that the clock was ticking.
"We need to wait a little longer. The next quarter will be crucial," he said. "If Chrysler doesn't look good by then, it may be better to have a miserable end rather than endless misery."
Meanwhile, Helmut Lense, who represents German employees on DaimlerChrysler's supervisory board, described as immoral the $8 billion lawsuit filed this week by Kerkorian.
"Without the tie-up he could use his shares as toilet paper at best," said Lense.
Christensen denied that charge. He said Chrysler was doing very well at the time of the merger in 1998, and while he said market forces and new models from the competition have been part of the problem for the company since then, the efforts of German managers to take control of Chrysler crippled its ability to react to market changes.
"There's a concept that Chrysler was at a peak in '98. We don't know it was a peak. Without the deal, it might have gotten better. What we do know is all these people have been thrown away over the last 24 months. How is it that all the people who made Chrysler so great in '98 are now no good and need to be shoved out?"
Shares of DaimlerChrysler were off 0.65 euro to  45.85 in late trading in Frankfurt Wednesday, while American depositary shares (ADRs) of DaimlerChrysler (DCX: Research, Estimates) fell 50 cents to close at $39.02 in U.S. trading.
-- from staff and wire reports 
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Tough road for Kerkorian's Daimler suit - Nov. 28, 2000
Kerkorian sues DaimlerChrysler - Nov. 28, 2000
DaimlerChrysler may cut jobs - Nov. 23, 2000
Daimler lowers Chrysler forecast - Nov. 17, 2000
DaimlerChrysler set to oust U.S. unit's CEO - Nov. 14, 2000
DaimlerChrysler operating profit skids 80% as Chrysler Group sales slump - Oct. 26, 2000
Chrysler losing money, key design executive - Sept. 27, 2000
Chrysler's president leaving Daimler - Sept. 24, 1999
Chrysler, Daimler Benz in auto merger deal - May 7, 1998
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