DaimlerChrysler sued for $9bn

DaimlerChrysler boss Jürgen Schrempp under fire

DaimlerChrysler's third largest shareholder is suing the company for $9bn.

Billionaire investor Kirk Kerkorian's Tracinda Corporation is also calling for the unwinding of the $36bn merger in 1998 of Daimler Benz and Chrysler.

Tracinda has filed a lawsuit in the US District Court in Delaware against the firm and senior DaimlerChrysler executives, including chairman and chief executive Jürgen Schrempp.

It alleges that the merger was misrepresented as a marriage of equals.

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Tracinda calls for Chrysler to "once again be an independent corporation owned by Chrysler shareholders".

Tracinda's lawyers accused the two companies of "fraudulently inducing the 1998 vote of Chrysler shareholders and knowingly deceiving the Securities and Exchange Commission, Chrysler's board of directors, Tracinda and other Chrysler shareholders through false representations".

Tracinda, Chrysler's largest shareholder in 1998, said it would not have voted for the merger "had it known Daimler Benz's true intention was to acquire and subjugate Chrysler, reduce it to division status and fire Chrysler's management".

The value of Tracinda's stake in the car firm has more than halved since the merger.

"This massive decline in shareholder value has coincided with Mr Schrempp's subjugation of Chrysler into a subordinate role and his purge of Chrysler's own long-time executives, which has demoralised Chrysler employees and dealers throughout North America."

The Chrysler operations are now losing money, plants are being idled, union relations are strained, and white-collar layoffs are expected soon.

Tracinda held 13.75% of Chrysler at the time of the merger agreement and now holds 4% of DaimlerChrysler.

Shares in DaimlerChrysler fell just under 2% when trading started in Germany on Tuesday morning.