EADS says Berlin move clears air, eyes alternative


The chief executive of European aerospace group EADS said a decision by the German government to take a 7.5 percent stake lifted uncertainty over the group’s shareholder structure but that the management had proposed a long-term alternative.

“The decision clarifies the evolution of the controlling shareholding in Germany and ends some uncertainty,” Chief Executive Louis Gallois told reporters at the Dubai Air Show.

Gallois struck a more concliatory tone than his probable successor, Airbus Chief Executive Tom Enders, who last week criticised the move as a step in “completely the wrong direction” as EADS tries to wean itself off state backing, Reuters reports.

Enders is expected to succeed Gallois in 2012.

Germany said last week state bank KfW would buy half of a 15 percent stake held by carmaker Daimler to help maintain a Franco-German balance in Europe’s largest aerospace group.

Daimler on one side, and a combination of the French state with 15 percent and media group Lagardere with 7.5 percent on the other, jointly control the Airbus parent group.

Daimler votes with 22.5 percent of the stock but had already sold an economic stake in a third of this, or 7.5 percent, to a consortium of banks and kept 15 percent.

The deal struck last week after Chancellor Angela Merkel’s minority coalition partners dropped their opposition will allow Daimler to reduce its fully owned stake to 7.5 percent in 2012.

The decision is seen as a temporary move to allow Daimler to focus on its core carmaking business, but industry experts expect the new structure to stay in place for some time.

Gallois said the EADS management had nonetheless proposed a long-term way of allowing the company to remove its current shareholder pact and give core shareholders freedom to sell their shares or remain invested in the company.
“We have put forward a long-term solution which would allow balance to be maintained by other means so that all shareholders would be treated equally and the core shareholders can buy or sell on the market as they wish,” he said.

EADS was created from a merger of French, German and Spanish aerospace assets in 2000. Besides owning the world’s largest commercial airplane manufacturer, it makes French nuclear weapons, German fighters and European space rockets.

Its delicate structure is kept in place by a shareholder pact designed to protect EADS from takeover and guarantee Franco-German balance, an objective that had to overcome bitter in-fighting through the first half of its existence.

The pact also limits the influence of the French government because at the time EADS was formed Daimler was suspicious of any state involvement in the group’s affairs.

Replacing the pact is not easy because Dutch law, under which EADS is incorporated, prohibits governments from maintaining a last-resort “golden share” — a veto right used in some countries to protect national security as an alternative to having large blocks of core shareholders.

Gallois said earlier this year the company was looking at an equivalent system to the golden share and sources familiar with the matter have said it could involve a ceiling on voting rights in the event of a takeover threat or other key events.

But legal experts say voting ceilings have few precedents in the Netherlands and France’s government does not show any sign of being ready to sell, meaning the necessary political support for a further shake-up could take a while to develop.