DaimlerChrysler lowers stake in Airbus parent
FRANKFURT (Reuters) - DaimlerChrysler has placed 7.5 percent of EADS with a public-private consortium in a 1.5-billion-euro ($1.95 billion) deal that maintains the Franco-German balance of power at the aerospace firm.
The world's fifth-biggest carmaker, DaimlerChrysler said on Friday the placement, which has been in the works for months, would effectively reduce its EADS stake to 15 percent but leave it with the voting rights on the full 22.5 percent. The company says it wants to focus on its core businesses.
The deal is designed to safeguard German influence in EADS at a time of major restructuring that could cost thousands of jobs at its Airbus subsidiary.
French Prime Minister Dominique de Villepin met the co-chief executive of EADS and head of Airbus, Louis Gallois, on Friday. He reiterated to Gallois the importance of evenly splitting any Airbus job cuts between countries, Villepin's office said in a statement. Germany's economy minister, Michael Glos, will see Gallois next week.
A German government spokesman said Daimler's deal should strengthen Germany's hand in talks over the restructuring amid union fears of up to 10,000 job cuts. EADS is expected to unveil details of its Power8 restructuring plan on February 20.
DaimlerChrysler shares hit a high of 49.78 euros and closed up 3.2 percent at 49.55, the leading gainer in the German blue-chip index DAX, which was up 0.5 percent.
EADS shares closed down 1.6 percent at 24.87 euros.
SHARING THE BURDEN
"This has broadly been expected," said Peter Rieth, analyst at BHF capital management.
EADS plunged into crisis last year after production problems delayed the flagship Airbus A380 superjumbo, costing it almost 5 billion euros in future profits.
As cuts at EADS loom, Germany fears ceding too much influence to France. The French government and French media firm Lagardere together own 22.5 percent of EADS.
France's Villepin also discussed the Airbus situation with German Chancellor Angela Merkel and again stressed the need for cost cuts to be evenly split between countries.
"They reaffirmed the need for close Franco-German co-operation based on two principles: an equal share of the impact of the plans on each partner country ... and a timetable and procedures which leave time for a serious dialogue with the social partners," Villepin's office said.
Goldman Sachs analyst Sash Tusa has said seven of Airbus's 16 major manufacturing sites could be sold, including four in Germany, two in France and one in Spain.
DEAL STRUCTURE
Under Friday's deal, DaimlerChrysler will put its entire 22.5 percent EADS stake into a new company, in which the investment consortium gets a one-third interest via a special-purpose entity.
DaimlerChrysler in return will receive around 1.5 billion euros in cash in the first quarter of 2007 in addition to the roughly 2 billion euros it will gain this year from a 2006 deal to sell forward another 7.5 percent of EADS.
Investors in the consortium get a preference dividend on their 7.5 percent stake equal to 175 percent of the normal EADS dividend, a DaimlerChrysler statement said.
DaimlerChrysler can opt to dissolve the new structure no sooner than July 1, 2010 and pay investors EADS stock or cash.
Germany, France and Lagardere get first refusal of any EADS shares provided in compensation.
"The structure of this transaction underscores DaimlerChrysler's links with EADS as one of its industrial partners and its main German shareholder," it said, adding the deal was coordinated with other major EADS investors.
Private-sector investors -- including Commerzbank, Deutsche Bank, Goldman Sachs and insurer Allianz -- will take up 60 percent of the special-purpose vehicle formed to take the stake.
Public sector investors including state development bank KfW
and a handful of German states get the rest.
"I see the transaction's structure as a good and balanced solution for all concerned," Commerzbank Chief Executive Klaus-Peter Mueller said.
Germany said it did not expect resistance from the European Commission to the plan.
Berlin is still looking for a long-term investor to take part of the EADS stake, a government source said.
"It makes sense to have an investor from industry for a long-term commitment," the source said.
For investors in the consortium click on
(Additional reporting by Hans Nagl, Patricia Nann and Eva Kuehnen in Frankfurt, Noah Barkin and Rene Wagner in Berlin, Sudip Kar-Gupta in Paris and Jason Neely in London)
