Bombardier Battles DaimlerChrysler
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FRANKFURT, Germany (AP) _ Canadian aerospace and transportation company Bombardier said Thursday it was seeking 1 billion euros ($860 million) in damages from DaimlerChrysler AG in a dispute over Bombardier’s purchase of railcar maker Adtranz.
Bombardier agreed to buy Berlin-based Adtranz for 790 million euros ($725 million) in 2000, and took over the company on May 1, 2001. After Bombardier went over Adtranz’s books, a dispute arose over the correct pricing of the deal. Adtranz and Bombardier were competitors, which limited the pre-sale accounting investigation known as due diligence.
DaimlerChrysler said it would fight the claim.
``DaimlerChrysler considers the damage claims asserted by Bombardier to be absurd and groundless in every respect,″ Manfred Bischoff, DaimlerChrysler’s management board member responsible for industrial holdings, said in a prepared statement.
A Bombardier statement said the difference resulted from the application of U.S. accounting rules in assessing the company’s worth, and from costs required to complete contracts with third parties. The statement gave no further details, and Bombardier officials could not immediately be reached for comment.
Bombardier said the two sides agreed at the time of the deal to submit any dispute to arbitration.
It’s not uncommon for an originally agreed price to go up or down in an acquisition as accountants detail a company’s balance sheet. But a difference amounting to more than the price of the original deal would be unusual.
Buying Adtranz strengthened Bombardier’s position in the railway equipment sector, and represented a move by DaimlerChrysler to concentrate more on its core automotive business.