FRANKFURT, GERMANY DaimlerChrysler agrees to pay $300M settlement

Shareholders say they were duped into approving the merger.
FRANKFURT, Germany (AP) -- U.S.-German automaker DaimlerChrysler said Friday it has agreed to pay $300 million to settle a class-action lawsuit from investors over the 1998 merger between Daimler-Benz and Chrysler Corporation.
DaimlerChrysler said it believed the suit seeking $22 billion was groundless, adding that insurance would cover $220 million of the payment.
Billionaire investor Kirk Kerkorian, who sued separately over the merger, is not part of the settlement, the company said in a statement. DaimlerChrysler "remains committed to a vigorous defense" of that case, the company said.
Jay Eisenhofer, lead attorney for the plaintiffs, said the settlement was reached in mediation. He said he was pleased with the proposal, which still must be approved by the U.S. District Court in Wilmington, Del.
"I think the settlement is a tremendous result for the shareholders," Eisenhofer said.
Shareholders' case
The shareholders who filed the suit claim they were duped into approving the 1998 merger after executives from both companies portrayed it as a union of equals when it was intended as a takeover of Chrysler.
DaimlerChrysler spokesman Hartmut Schick said all claims against the company over the merger are without merit.
But the risk of a jury granting even a part of the $22 billion claim was too much, he said.
"Seeing this risk from a jury, we decided to settle the case," Schick said.
Kerkorian, whose Tracinda Corp. once held 14 percent of Chrysler's stock, has claimed Daimler-Benz chairman Juergen Schrempp -- now DaimlerChrysler's chief executive officer -- and other company officials misled shareholders to cheat them out of their rightful acquisition fee.
DaimlerChrysler has stated Kerkorian not only approved the acquisition but pushed for its completion.
Denied dismissal
A federal judge denied part of DaimlerChrysler's request to dismiss the lawsuits in June .
U.S. District Judge Joseph J. Farnan Jr. said the automaker did not establish that information available to shareholders was "sufficient as a matter of law to alert a reasonable investor to the possibility of fraud."
DaimlerChrysler shares were down 12 cents, trading at $37.88 early Friday on the New York Stock Exchange.