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DaimlerChrysler says boosts case against Kerkorian

FRANKFURT, Feb 19 (Reuters) - DaimlerChrysler said on Wednesday support from former directors of its U.S. Chrysler arm strengthened its chances of getting an $8 billion lawsuit about the 1998 merger with Daimler-Benz dismissed.

The world's fifth biggest carmaker said eleven former Chrysler directors, including former chairman Bob Eaton, had submitted sworn declarations backing DaimlerChrysler's motion to halt the lawsuit, which accuses the company of lying to Chrysler shareholders about the nature of the merger.

"We are even more confident than we were before (that the case is unfounded and will be dismissed)," said a spokesman for DaimlerChrysler.

A court in Delaware in the United States will decide whether or not the case should proceed after March 17 when all submissions are due.

Former DaimlerChrysler shareholder Kirk Kerkorian sued the group's senior management through his Tracinda Corporation in November 2000, alleging that DaimlerChrysler Chief Executive Juergen Schrempp and other senior managers misled Chrysler shareholders in 1998.

The maverick shareholder claims they dubbed the deal between Daimler-Benz and Chrysler "a merger of equals" when in fact they were seeking to relegate Chrysler to a division of DaimlerChrysler.

Kerkorian launched the lawsuit, which could lead to bad publicity for DaimlerChrysler if it goes ahead, just as Chrysler was slipping into the red.

Since then DaimlerChrysler has pumped in at least 3.0 billion euros ($3.22 billion) into its U.S. business and sent German executives to oversee a turnaround.

DaimlerChrysler shares have lost about two thirds of their value since the "merger-made-in-heaven", as the company then described it, was announced.

DaimlerChrysler said in a statement the merger agreement "completely and accurately described the understanding between Chrysler and Daimler-Benz", noting also that the agreement was executed. The company also said its motion states that all eleven former Chrysler directors would vote for the 1998 merger again, knowing what they know today and that the deal was a "merger of equals" as those directors understood the term.