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EADS confirms talks about shareholder shakeup

by Andrew Bulkeley  |  Published December 3, 2012 at 8:41 AM
European Aeronautic Defence and Space Co. NV on Monday, Dec. 3, confirmed it was in talks about a shareholder reshuffle following the failure of its $45 billion merger with the U.K.'s BAE Systems plc.

The announcement follows a New York Times report that Germany's KfW reconstruction bank would buy a 12% direct stake in EADS while France would cut its direct investment to 12% to balance the two countries' sway over the Airbus maker.

"The company is participating actively in such discussions, as appropriate, with the support of its board of directors, with the objective to preserve and enhance, where appropriate, the interests of all stakeholders, including shareholders, clients and employees," the company said.

It named no shareholders directly and said nothing about potential stake sizes. Shareholders would likely have to approve the move, EADS said.

An agreement that merged a handful of European aerospace assets and created EADS in 2000 sought to balance the control Germany and France assert over the company. Although France held a total 22.35% direct and indirect stake along with publisher Lagardère SCA, Germany was comfortable with its interests being represented by a 22.35% investment held by a consortium that's controlled by vehicle giant Daimler AG.

Spain also owns 5.45% of EADS.

But in recent years, both Daimler and Lagardère have said they would like to offload their holdings to concentrate on their main activities.

The New York Times reported that Germany's KfW is now planning on buying 7.5% of EADS from banks that are part of the Daimler consortium as well as 4.5% from Daimler itself. In exchange, France would sell 3% of its direct 15% stake to a Dutch holding company without voting rights while retaining dividend rights.

"There can be no certainty that these discussions will be conclusive,"

the company said.

Berlin earlier this year announced plans to buy a minority EADS interest to let Daimler out and keep other investors away from the company.

But those plans appeared in jeopardy this summer when EADS announced a surprise agreement to merge with BAE. The deal eventually collapsed as shareholders resisted the plans. EADS CEO Tom Enders blamed the failure on German politicians including Chancellor Angela Merkel.

Elected German officials were hesitant to agree to the plan because it would have left Europe's biggest economy empty-handed - the agreement placed Airbus' headquarters in France with the enlarged group's defense business in the U.K.

Investors welcomed the news. The stock gained 3.2%, or €0.82, to €26.585

($34.83) in Frankfurt in late morning trading.

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Tags: BAE Systems plc | Daimler AG | EADS | European Aeronautic Defence and Space Co. NV | KfW | Lagardère SCA | Tom Enders

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