EADS hit by Germany, France shareholder moves

BRUSSELS: Accelerated efforts by Germany and France to rearrange stakes in EADS knocked shares in the Airbus parent on Friday as investors fretted about surplus stock and state interference.

In the latest twist to rapidly unfolding events since merger talks with BAE Systems collapsed last month, German newspaper Handelsblatt reported France could sell 3% of EADS to Germany to help bring Berlin on board as a shareholder.

That would force carmaker Daimler, which represents German interests in Europe’s largest aerospace group, to sell 3% of EADS on the market to keep the Franco German balance intact while further changes are drawn up. Shares in EADS fell 1.4%.

“The manoeuvering of the government shareholders, and the overhang of a potentially significant secondary sale are no doubt weighing on investor sentiment,” RBC Capital Markets analyst Rob Stallard said in a note.

The ownership structure of Europe’s largest aerospace group has been in the spotlight since the planned merger with BAE drew a veto from Germany and sped up efforts by Berlin to play a more direct role in EADS, matching France.

French President Francois Hollande confirmed France and Germany had discussed the issue on the sidelines of a European Union summit in Brussels on Friday, as reported by Reuters.

“We will need to review our respective shareholdings and redefine the shareholder pact, and all that will happen in the next few weeks,” Hollande told a news conference.

EADS is jointly controlled by French and German interests representing 45% of the votes contained in a shareholder pact. Spain owns 5.5% but is not in the main pact.

Unlike in France, where the government owns 15% in partnership with media firm Lagardere at 7.5%, Germany exercises its interests solely through car firm Daimler, which owns or controls 22.5% of the aerospace group.

Lagardere and Daimler both want to reduce their stakes.

The German government has evolved in the past year from being an unwilling purchaser of last resort for Daimler’s shares to being an ardent potential buyer in order to safeguard its interests in EADS, according to people familiar with the talks.

Germany has indicated it wants to match France’s government stake in EADS.

But the two sides can only own 12% each to avoid triggering a mandatory bid under takeover law in the Netherlands, where EADS is registered.

Germany would top up its 12% stake by acquiring 7.5% from a bank consortium managed by Daimler and 1.5% from Daimler itself, Handelsblatt reported.

EADS declined to comment. — Reuters