Chrysler Shareholders OK Merger
WILMINGTON, Del. (AP) _ Chrysler Corp. shareholders voted overwhelmingly today to merge the No. 3 U.S. automaker with Germany’s Daimler-Benz AG and create a new global transportation power.
Daimler-Benz shareholders were meeting separately today in Stuttgart, Germany, for a vote on the $38 billion deal.
The vote by Chrysler shareholders was 97.5 percent of shares voted in favor of the deal and 2.5 percent against. The results were released near the conclusion of a special shareholders meeting in Wilmington, where Chrysler was incorporated in 1925.
The meeting of about 140 shareholders lasted more than two hours as dozens questioned Chrysler Chairman Robert J. Eaton about the merger. Most of those who addressed Eaton opposed the deal, in contrast to the lopsided vote.
Nearly all the votes were cast before today, either by mail or the Internet, making the meeting little more than a formality.
Spokesmen for Daimler, Germany’s biggest industrial firm, expected its shareholders meeting to extend into the night.
Daimler-Benz chief executive Juergen Schrempp told the shareholders that their company is in better shape now than it has been for years.
Operating profit doubled in the first half of 1998 to $2.26 billion and revenue projections for 1998 have been raised from $79 billion to $83 billion.
``With DaimlerChrysler, we intend to set a new standard in earnings power, profitable growth and in helping shape the future of our society,″ Schrempp assured shareholders.
Schrempp, 54, made his reputation as a defender of shareholder value by refocusing Daimler on its core business _ led by Mercedes-Benz cars _ after his predecessor Edzard Reuter ran up record losses by expanding into a diversified conglomerate.
The disparity in executive pay between Germany and the United States is a chief Daimler shareholder concern going into the vote. Some fear Daimler managers will use the merger to raise their income.
Last year, Chrysler’s Eaton took home $16 million in total compensation, compared to about $2 million for Schrempp.
Shareholders with union ties also worry about merger-related layoffs, despite promises from both chiefs that no jobs will be lost.
And there are concerns the merger might dull the image of Daimler’s Mercedes brand. How, one watchdog asked, will Schrempp and Eaton be able to keep the Chrysler and Mercedes brands separate if, at the same time, they speak about large synergy effects from sharing platforms and merging their purchasing?
Both Daimler and Chrysler want 90 percent of the shareholders to turn in their shares for shares in the new company later this month, although they only need 75 percent.
If less than 75 percent participate, Daimler and Chrysler said they will have to cancel the whole deal.