Chrysler Merger Defended

WILMINGTON, Del. —  The U.S. auto executive responsible for Chrysler Corp.’s so-called merger of equals with Daimler-Benz defended the deal in court Thursday, saying Chrysler probably would have gone bankrupt without it.

“I believe that shareholders have been served very, very well by the merger,” former Chrysler Chief Executive Robert Eaton testified on the fourth day of a trial in federal court here.

“There is a high probability Chrysler would have been bankrupt if we had not done this merger,” said Eaton, who was Chrysler’s chief executive when it sealed the agreement creating DaimlerChrysler.

Since that merger, Chrysler has restructured repeatedly and leaned on its German merger partner for financial support.

Billionaire investor Kirk Kerkorian is seeking to prove that Chrysler shareholders were misled by DaimlerChrysler CEO Juergen Schrempp, who is alleged to have plotted a secret takeover of Chrysler while selling the deal as a merger to lower the transaction price.

The issue is important because shareholders are entitled to an acquisition premium in takeovers as opposed to mergers.

DaimlerChrysler has repeatedly denied any wrongdoing.

Kerkorian, who is demanding more than $1 billion in compensatory damages, filed his civil lawsuit after Schrempp told the Financial Times in October 2000 that he had always meant to make Chrysler a mere division of a new global automotive giant.