SOUTHFIELD, MICH., AUG. 5 -- American Motors Corp. shareholders today approved a $2 billion merger with Chrysler Corp. despite charges from dissidents that they were being sold out cheap.
More than 91 percent of the shares were voted in favor of allowing Chrysler to acquire AMC for $4.50 a share, officially making today the last day of business for AMC as an independent auto company.
AMC executives said the final tally was 108 million shares in favor of the merger to 4 million against, with 553,000 abstained. Most of AMC's 111,000 shareholders voted by proxy.
In his opening remarks to shareholders, AMC President Joseph E. Cappy said:
"For all of us here this is a solemn occasion, to be sure, but not a sad one. Rather, it should be regarded as a day of fulfillment instead of disappointment.
"Before you cast your votes today I want to disabuse anyone of the notion that this merger is a case of a failing company falling prey to a more successful competitor. American Motors is not a failing company."
At a brief news conference following the AMC meeting, Chrysler Chairman Lee A. Iacocca called the merger -- the first in the U.S. auto industry in 20 years -- "a milestone."
To the tune of "Stars and Stripes Forever," Cappy drove Iacocca up to the podium at Chrysler's design center in nearby Highland Park in a World War II vintage Army jeep.
Under the merger agreement, the AMC nameplate will disappear, Iacocca said. The new Chrysler subsidiary will be called Jeep-Eagle.
The red, white and blue logo displays the Chrysler star logo above the new nameplate.
"We aren't combining our strengths, we're increasing them," Iacocca said.
Under the merger, Cappy will be a group vice president at Chrysler with responsibility for Jeep-Eagle marketing. He also will head the transition team overseeing the assimilation of AMC into Chrysler's operations.
John P. Tierney, AMC's vice president and chief financial officer, will become chairman of Chrysler Financial Corp. while Francois Castaing, an AMC group vice president of product and quality, becomes vice president of Jeep and truck engineering.
Last month AMC announced a quarterly profit of $30.2 million, the largest second-quarter profit in its history. Cappy said AMC would post a profit in the second half even without the merger.
"What this illustrates, I think, is that AMC has both the people and the products to play the game in today's market," Cappy said. "Whether we have the financial strength to stay the distance in the face of the burgeoning competition out there ... is another matter entirely. Clearly we do not."
On Tuesday, the Federal Trade Commission closed its investigation of the merger, allowing the deal to be completed after the official vote by AMC stockholders.
The takeover will cost Chrysler about $2 billion, including assumed long-term debt obligations.
Earlier this week, a dissident group called shareholders for an Independent American Motors Corp. filed suit in U.S. District Court in New York to halt today's vote, alleging that AMC failed to disclose its true value.
Jordan H. Eskin, a lawyer and member of the dissidents' committee who attended the meeting, said the acquisition leaves shareholders with "scraps and bones."
"You're selling out this company. You're selling out yourself, Mr. Cappy," Eskin said. "You're selling out shareholders, and all the employes of this company are being sold right down the River Seine."
In May, Chrysler agreed with AMC's board of directors and Renault, the French car maker that owns 46.1 percent of AMC, to buy the No. 4 American auto maker for $4.50 a share.
Chrysler's original proposal, which was made on March 9, offered AMC stockholders $4 a share