Tracinda Corp. v. DaimlerChrysler

Fed. Sec. L. Rep. (CCH) ¶ 93,236 (2005)

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Tracinda Corp. v. DaimlerChrysler

United States District Court for the District of Delaware
Fed. Sec. L. Rep. (CCH) ¶ 93,236 (2005)

RW

Facts

In 1998, Chrysler Corporation and Daimler-Benz AG (Daimler) (defendant) agreed to merge into a single corporation, DaimlerChrysler AG (defendant). Chrysler successfully solicited proxy votes from Tracinda Corporation (plaintiff) and other shareholders to approve the merger. The business combination agreement, proxy solicitation, and fairness opinion letter issued by Chrysler’s investment banker all described the transaction as a merger of equals, with Chrysler and Daimler initially sharing power on DaimlerChrysler’s board. However, neither the agreement nor the proxy solicitation made any commitments as to DaimlerChrysler’s future management structure or its future strategic direction, and the fairness opinion letter stated that predecessor companies did not always share power equally in the successor entity produced by a merger of equals. By 2000, all the Chrysler directors on DaimlerChrysler’s board had retired or resigned. The new Daimler-dominated board ran Chrysler as Daimler’s American division rather than as Daimler’s full partner. Tracinda sued Daimler and DaimlerChrysler in federal court for having misrepresented the nature of the 1998 transaction in violation of the Securities Exchange Act of 1934 and its implementing rules.

Rule of Law

Issue

Holding and Reasoning (Winter, J.)

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Mergers and Acquisitions

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