EADS shares up on shareholder shake-up prospects

PARIS Mon Dec 3, 2012 2:56pm EST

A visitor stands at the EADS booth during the ILA Berlin Air Show in Selchow near Schoenefeld south of Berlin, September 13, 2012. REUTERS/Tobias Schwarz

A visitor stands at the EADS booth during the ILA Berlin Air Show in Selchow near Schoenefeld south of Berlin, September 13, 2012.

Credit: Reuters/Tobias Schwarz

PARIS (Reuters) - Shares in EADS EAD.PA rose on Monday as European nations raced towards a deal aimed at overhauling the convoluted shareholder structure at Europe's largest aerospace group.

The Airbus parent said it was in talks on its ownership with France, German and Spain, and people familiar with the matter said the talks involved a sweeping re-arrangement of government stakes.

That would be coupled with a staged exit of its industrial partners, reducing big shareholder blocks below 30 percent instead of more than 50 percent.

"The company is participating actively in such discussions ... with the objective to preserve and enhance ... the interests of all stakeholders," EADS said in a statement.

French President Francois Hollande said EADS shareholders were close to a deal. "We need revamp the shareholder pact," Hollande told reporters after a summit with Italian Prime Minister Mario Monti. "An agreement is close (but) it is not yet completely signed.

A German economy ministry spokesman also said efforts were under way to reach a deal as quickly as possible.

Shares in the Franco-German group rose 2.8 percent to 26.61 euros by 10:16 a.m. Eastern Time (1516 GMT) as investors warmed to the promise of greater clarity on its shareholder structure, also helped by comments from Airbus head Fabrice Bregier in an interview with Reuters.

Bregier said Airbus had sold almost 200 planes in November, leaving it just four short of a target of 650 for the year, and said the group had the potential to increase its profits on a yearly basis for the next four to five years.

The ownership issue is crucial at EADS since the main industrial shareholders Daimler AG (DAIGn.DE) and Lagardere SA (LAGA.PA) have pledged to refocus on their core activities, placing the company's balanced structure under strain.

Germany has stepped forward to buy some of Daimler's shares, raising concerns of growing political interference in EADS.

EADS' ownership structure has also become an urgent issue since the collapse of $45 billion merger talks with UK arms maker BAE Systems Plc (BAES.L), exposing the fragility of its existing shareholder structure.

WAY OUT

"The BAE discussions caused a lot of movement and demonstrated to people like Lagardere that they could find a way out," said a person familiar with the discussions.

The ownership talks are set to result in France and Germany each holding 12 percent in the company, joined by Spain on around 4 percent and keeping the combined voting block below a 30 percent legal threshold.

Germany will build its stake by buying 7.5 percent from a bank consortium, whose shares are under Daimler's voting control, and 4.5 percent from Daimler which will separately part with a further 3 percent, sources close to the talks said.

That will leave Lagardere and Daimler with 7.5 percent each left to sell, but cash-rich EADS will announce a share buyback at the next shareholder meeting to help mop up excess stock and defend its share price, the sources said.

French Chairman Arnaud Lagardere is expected to remain in his post until a shareholder meeting in the spring, which is likely to bring in a mainly independent board led by a new chairman, the sources said.

EADS, which is due to hold an investor meeting on Monday, said only: "The currently discussed potential changes are likely to require the approval of EADS NV shareholders and there can be no certainty that these discussions will be conclusive."

Two sources familiar with the discussions said on Sunday that a deal could be reached by Monday.

Under Dutch law that governs EADS, a group of shareholders cannot control more than 30 percent of the votes without triggering a mandatory bid for the whole company.

Reuters reported on Friday that France and Germany were close to a deal to shake up EADS after France agreed to hive off part of its 15 percent stake to preserve parity with Germany inside a core government shareholder group.

Under this arrangement, France is expected to place 3 percent in a non-voting structure in the Netherlands, while keeping economic control of the stock.

A German newspaper report said talks were also looking at what level of state representation there could be on the company's board, with suggestions of two places each for France and Germany and one for Spain.

(Additional reporting by Alexandra Hudson in Berlin, with Alexander Huebner and Ed Taylor in Frankfurt, Emmanuel Jarry and James Regan in Paris, and Michael Shields in Vienna; Editing by Blaise Robinson and David Holmes)

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