But that policy fell by the wayside in the wake of the global banking crisis, which required massive intervention and, among others, the nationalization of Germany's second-largest bank, Commerzbank. The policy shift that was unavoidable to keep the banking sector from collapsing four years ago had serious ramifications elsewhere, too. It helped change the mind-set of key decision makers who came to the conclusion that state intervention was a suitable measure in other areas, too.
Long before the first rumors about a possible combination of EADS and BAE emerged, Merkel had decided that German interests can only be served well in the future if the government owns an EADS stake of the same size as France to ensure the much-sought-after balance of power.
Since EADS was set up 12 years ago, the French and German sides within the company have often argued that more workshare is about to move across the border, leading to the loss of highly qualified jobs, engineering and development competencies and production facilities. None of that has happened, at least not to any noticeable degree. Similar concerns were at the core of Germany's opposition to the merger. With the Airbus business centered in Toulouse and the defense business likely being run out of the U.K., wasn't it only a question of time until Germany would become disadvantaged?
Things became serious when car manufacturer Daimler made clear that it will sell down its 15% stake in EADS over time. Daimler has long functioned as Germany's representative on the EADS board in times when it did not appear opportune to have a direct government stake. With the process dragging on over several years, Daimler became increasingly nervous and eventually told Merkel's government that it might sell its shares over the stock exchange. The existing shareholder pact regulating powers between Daimler, France's Lagardere Group, and the French and Spanish governments would have imploded.
Merkel realized it was time to do something. A plan to step in was crafted and even Tom Enders's best efforts to come up with a corporate governance scheme that would keep the government out proved to be unsuccessful. He had hoped that as part of the merger, governments would opt out. Now, more of them opt in.
Germany will, like France, control 12% of EADS; Spain's share will be 4%. The combined 28% is significantly more than the 20% previously held by France and Spain. There are some remedies, though, which make the new governance easier to cope with. Administrative board members can only be proposed by the nomination committee and each shareholder is limited to 15% of voting rights.
EADS has come up with some surprisingly positive statements about the new setup, but it is evident that, again, politics and diplomacy are at play. Following the recent clashes over the failed merger (Enders and Hintze still don't talk to each other), EADS believed the situation needed to be calmed. Ultimately, despite outward appearances, it will still be Hollande and Merkel who call the shots at EADS. Even as the near-merger recedes in time, that is not good news for the company.