October 26, 2012
Germany is rushing to buy an initial 7.5% stake in EADS before year’s end to ensure its power in Europe’s largest aerospace company is similar to that of France, although an economics ministry report warns of the time constraint on concluding the transaction within the next two months.
The German government for more than a year has planned to buy a 15% stake in EADS from automaker Daimler and another 7.5% held by the Dedalus banking consortium for more than a year.
Negotiations, however, were suspended mid-July, when the German government was informed about negotiations over the possible merger of EADS and U.K. manufacturer BAE Systems.
That merger collapsed earlier this month, mainly because Germany was concerned about the loss of jobs. The German government also was committed to obtaining a stake in the combined company even if the merger had taken place.
Now Daimler is accelerating the sale of its EADS holding, and has announced it will sell an initial 7.5% stake before the end of the year. Daimler is prepared to sell that stake on the open market if government-owned development bank KfW does not finalize a deal.
The German government, which is keen to hold the same level of influence within EADS as the French government, admits that, even with KfW entering a shareholder pact, it will not have the same rights as France. The French government has veto rights on acquisitions and divestitures exceeding €500 million ($648 million), as well as industrial and financial alliances and cooperation deals.
To limit the difference, Germany can purchase a larger stake in EADS after the Daimler holding is sold from banks involved in the Dedalus consortium. This could allow the German government to own a 22.5% stake in EADS.
The French government currently has a 15% stake in EADS, while French media conglomerate Lagardere Group holds a further 7.5%. Lagardere, like Daimler, has indicated that it would like to sell its stake.