DCX Shareholders Vs Daimler Management: Round 2
In 1999, a group of shareholders launched a court action against DaimlerChrysler management. They shareholders felt that their shares in Daimler AG (before the DaimlerChrysler “merger of equals”) were undervalued because management used an unfair exchange ratio (1.005 shares of DCX to every share of old Daimler AG). In 2006, a Stuttgart court ruled in favor of the shareholders and ordered DaimlerChrysler to pay them €230m (about $321m in today’s exchange rates). As far as everyone was concerned, that was the end of that. But not to Daimler.
Daily Finance reports that Daimler went back to court. A higher one. The Higher Regional Court (Oberlandesgericht) in Stuttgart, to be precise. They appealed the lower court’s ruling. And this time, Daimler won. “If the agreement is result of a negotiation process which is backed by a large majority of shareholders, that’s the best warranty that the executive took adequate care of the economic interests of their respective investors,” said the court in a statement, “A court has only limited powers of review in these cases”. In other words, “You lot voted for it, you lot live with it.” As a result, the previous ruling of Daimler paying the shareholders represented in the suit, an extra €22.15 per share in question, was overturned. DaimlerChrysler, the gift that keeps on taking.
This is not necessarily the end of it. The DCX shareholders can go all the way to the Bundesgerichtshof, if they so choose.
More by Cammy Corrigan
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this seems to be a frivolous law suit. the majority of shareholders voted for the merger. If the merger would have been a success, they wouldn't have sued to give money back to Daimler either.:-) Live by the sword, die by the sword. this is what happens when you invest money - you can win or lose. Maybe those individuals voted against the merger (we don't even know that) - but that is how shareholder laws work. Majority rules. If it wasn't there never would be any decision made since there always is one single shareholder voting against anything. and the fact that they invested money in Chrysler in the first place (and the quality of their product was common knowledge), shows they shouldn't make financial decisions. to begin with :-)
So the US isn't the only place that screwed Chrysler shareholders it seems, or in this case soon to be chrysler stake holders. Keep these stories in mind when the GM IPO comes out. Remember the golden rule: socialize the profits and privatize the losses.