PARIS, April 2 European aerospace group EADS
announced a share buyback worth up to 3.75 billion
euros ($4.81 billion) on Tuesday to dampen sales by a dismantled
group of core shareholders, following a radical shake-up of its
The buyback, to be carried out over 18 months, is equivalent
to around 11 percent of the value of the Airbus parent group
based on Tuesday's near-record closing price of its shares,
which have been rising in anticipation of the overhaul.
As part of changes intended to make the Franco-German-led
company more market-friendly, EADS is buying back shares to
prevent an overhang of stock released by French media group
Lagardere and German car firm Daimler.
Details of the buyback emerged after EADS formally completed
the switch to a new structure on Tuesday and confirmed Denis
Ranque, the former head of French defence firm Thales,
as chairman of a newly independent board.
He replaces Arnaud Lagardere, who stepped down as his group
prepares to leave the aerospace firm it helped create in 2000.
Until now, EADS has been controlled by a pact between French
and German interests led by Lagardere, the French government and
Daimler. Under the new system, France, Germany and
Spain will hold stakes but see their powers curtailed.
The operation is expected to be split equally between the
public and an allocation for core shareholders, earmarked almost
exclusively for Lagardere.
The system of two tranches gives Lagardere an exit path
after it agreed to let its German opposite number in EADS,
carmaker Daimler, start unwinding positions earlier.
The buyback is expected to be financed by cash available on
the balance sheet and will boost earnings per share, EADS said.
Repurchased shares will be cancelled.
The group's net cash stood at 12.2 billion euros at the end
The buyback will be carried out at a maximum price of 50
euros a share. The stock closed 3.6 percent higher at 41.115
euros on Tuesday.
EADS first announced plans to buy back up to 15 percent of
its shares in December, but the cost of such an exercise has
risen sharply as EADS shares gained more than a third this year,
propelled by civil demand and news of the buyback itself.
Chief Executive Tom Enders last week appeared to set a
ceiling of 4 billion euros or 12 percent of EADS stock on the
operation when he told shareholders he would not advocate
spending more than a third of the company's net cash.
In a statement on Tuesday, Enders said the buyback would
maintain the company's "strategic flexibility and a sound
The buyback will mop up about two thirds of an overhang of
shares created by changes of ownership, with Lagardere and
Daimler preparing to sell 7.5 percent of EADS each and Spain
expected to sell 1.15 percent by April 9.
Analysts say the sales by the outgoing shareholders could
weigh on EADS share prices in the short term. But investors have
broadly welcomed limits on state interference and a sharp rise
in the proportion of freely traded shares from 50 to 72 percent.
Daimler intends to sell its remaining 7.5 percent in the
second half of the year, a source familiar with the matter told
Reuters last week.