EADS seeks path for “trapped” shareholders


Europe’s largest aerospace group EADS is studying new ways of fending off potential aggressors that would give core Franco-German shareholders room to sell off stakes, its chief executive said.

The idea is to wean the Airbus parent company off a system of controlling stakes which have preserved a Franco-German power balance since the company was created 11 years ago, but which is under strain due to changes of strategy by the core investors.

Acknowledging for the first time that founding shareholders Daimler and Lagardere may feel “trapped,” Louis Gallois said the company was exploring new solutions after a proposal to set up golden shares fell foul of Dutch law, which governs EADS.
“EADS’s future depends on a sustainable shareholdership. The discussions are engaged at least in Germany on the reorganisation of the shareholdership,” Gallois told a news briefing.
“I suggest that we take this opportunity to adopt not a short-term solution, but a solution that would be sustainable in the long term. Lagardere and Daimler are candidates to sell at least part of their shares sooner or later,” he said.
“Other solutions exist beyond a controlling shareholding which is an extremely rigid one. It gives the controlling shareholders the feeling of being trapped. If they were no longer controlling shareholders, with the protection I was mentioning, they would have the freedom to sell their shares as they want.”

German carmaker Daimler wants to sell most of its 22.5 percent stake in EADS to the German government and French media group Lagardere has indicated that although it is in no hurry to sell, its 7.5 percent stake is not strategic.

The two companies are involved in a shareholder pact with the French government which owns 15 percent.

EADS was roiled by Franco-German tensions between 2005 and 2007 and the company and its investors fear that any prolonged uncertainty over its shareholding structure could be damaging.

The pact both protects EADS from takeover and guaratees equality between French and German interests in the group.

Senior company officials said little movement on the issue was expected ahead of French elections in 2012 and Gallois did not provide any details on the proposals.

Management scenarios have been discussed with shareholders, who have yet to give their response.

Dutch companies typically use a friendly foundation, known as a “Stichting Preferente aandelen” to protect themselves against shareholders who are considered hostile, either because they have launched a hostile takeover or are seeking the removal of certain board members.

The company issues shares to the foundation, which effectively remains dormant until it is needed, at which point it becomes active and can be called on to vote against the hostile shareholders at an annual or emergency general meeting.

Gallois meanwhile reiterated there would be “no surprises” about his mandate, which ends in the middle of next year.

Airbus Chief Executive Tom Enders is widely expected to replace Gallois under a deal to simplify the company’s governance and then rotate top jobs between French and German executives, which Paris and Berlin struck in 2007.