WILMINGTON, DEL. -- The U.S. auto executive responsible for Chrysler Corp.'s so-called "merger of equals" with Daimler-Benz defended the deal in a U.S. court yesterday, saying Chrysler would probably have gone bankrupt without it.

"I believe that shareholders have been served very, very well by the merger," Chrysler's former chief executive officer Robert Eaton testified on the fourth day of a trial in federal court in Wilmington, Del.

"There is a high probability Chrysler would have been bankrupt if we had not done this merger," added Mr. Eaton, who was Chrysler's CEO when it sealed the agreement creating DaimlerChrysler AG. Since that merger, Chrysler has restructured repeatedly and leaned on its German merger partner for financial support.

Billionaire investor Kirk Kerkorian is seeking to prove that Chrysler shareholders were misled by DaimlerChrysler CEO Juergen Schrempp, who is alleged to have plotted a secret takeover of Chrysler while selling the deal as a merger to lower the transaction price.

The issue is important because shareholders are entitled to an acquisition premium in takeovers as opposed to mergers.

DaimlerChrysler has repeatedly denied any wrongdoing.

Mr. Kerkorian, who is demanding more than $1-billion (U.S.) in compensatory damages, filed his civil lawsuit after Mr. Schrempp told the Financial Times in October, 2000, that he had always meant to make Chrysler a mere division of a new global automotive giant.

In his interview, played in court, Mr. Schrempp said he and Mr. Eaton had agreed the company needed to start with equal numbers of Americans and Germans "for psychological reasons" and that Chrysler would eventually become a unit of Daimler. Mr. Eaton said he never used "that terminology" in discussions with Mr. Schrempp.

Prodded by Mr. Kerkorian's lawyer Terry Christensen, Mr. Eaton acknowledged publicly for the first time that he was "very upset" by Mr. Schrempp's interview.

He declined to characterize what upset him because he didn't know exactly what Mr. Schrempp "was trying to say."

Under further questioning from Judge Joseph Farnan, Mr. Eaton said the merger probably would have broken off if Mr. Schrempp's now infamous interview had been published before the deal was finalized.

But Mr. Eaton was adamant in his defence of the deal and said management had a right to abandon or change its original terms, including the emphasis on equal American and German divisions, if it was necessary for the health of the company.

In his testimony, Mr. Eaton indicated surprise, nonetheless, at the near total dominance Germans have exerted over DaimlerChrysler's top management team since the merger.

"No, sir, I did not anticipate that," Mr. Eaton said. Mr. Eaton, once listed as co-CEO of DaimlerChrysler, took early retirement in 2000 and his chosen successor as head of the Chrysler Group, Canadian-born James Holden, was replaced not long after by former Daimler executive Dieter Zetsche.

Mr. Eaton said in court that he has a $30,000-a-month pension from DaimlerChrysler, full medical benefits and vested stock options.