Germany to take stake as EADS shakes up ownership2 min read . Updated: 06 Dec 2012, 11:49 PM IST
Deal will give the French and German governments 12% shares each, while Spain will hold about 4%
Paris: European aerospace and defence company EADS NV announced on Wednesday a new ownership structure in which Germany is set to join France and Spain as state shareholders—even as overall government influence shrinks at the company.
The parent company of plane maker Airbus SAS, the archrival of US-based Boeing Co., said the deal would eventually give the French and German government each 12% shares, while Spain would hold about 4%.
Meanwhile, private sector investors Daimler AG of Germany and France’s Lagardere SCA would reduce their respective stakes. EADS, Europe’s largest aerospace company, has been looking for new direction after squabbling between its German and French owners and the British government in October scuttled a proposed $45 billion tie-up with BAE Systems Plc of Britain. That deal would have created a company with a market value just shy of Boeing’s.
Lagardere, a French defence and media company, and auto maker Daimler have long said they were looking to pull out from an investment they no longer see as strategic. EADS said it would launch a share buy-back next year of up to 15% that will pave the way for the companies to substantially reduce their stakes.
In a statement, EADS chief executive officer Thomas Enders called the shareholding shake-up “the most important change since the creation of the company more than 12 years ago". EADS said the shareholding overhaul will “simplify the governance" and allow the state shareholders to “protect their strategic interests". The moves would ultimately amount to less state influence at the company—reducing their interests in the company from about 50% currently to just under 30% if the deal is completed.
Daimler, the German car maker behind Mercedes-Benz, said in a statement that the deal was “a big step towards a more market-oriented shareholder structure and will expand the entrepreneurial freedom of EADS". Since EADS was formed, France and Germany have tried to ensure they have equal influence in EADS: France opted in part for a direct state share, while Germany instead expressed its interests through Daimler.
At the end of 2011, a French state investment vehicle, Sogepa, held about 15% while Lagardere owned about 7.5%—putting them on a par with the total 22.35% held by Daimler. Under Thursday’s agreement, France will ultimately reduce its holding from 15% currently to 12%, while Germany’s government steps into the picture directly for the first time. The French government added that the deal would also ensure “the projection of the strategic interests of national defence". France, along with Britain, is the biggest military power in Western Europe. Besides its Airbus civilian aircraft business, EADS is also a major player in military contracting—with products and stakes in projects like the Ariane-5 satellite launcher, Meteor missile systems, the Eurofighter and the A400M military transporter.
German economy minister Philipp Roesler, of the pro-business Free Democrats party, said a reduced government role in EADS—which employs about 50,000 people in Germany—was “excellent news". “While 50% of the company’s shares are today directly or indirectly attributed to the three involved states, the states’ stake will shrink to below 30% in the future," he said, even as the deal maintains French-German balance. “The agreement also shows that big European projects can be carried out in close partnership also in these for Europe difficult times." AP