(The following statement was released by the rating agency)
Nov 23 - A reported plan to streamline the ownership structure of EADS is unlikely
to materially improve corporate governance issues at the aerospace company, Fitch Ratings says.
The changes will not alter the perception that EADS is a state-controlled corporation, which
restricts its chances of winning large export defence contracts, but they would bolster the
finances of major shareholder Daimler.
The complex arrangement of state control at EADS, through both direct and
indirect shareholdings, was a key factor in the collapse of EADS' attempted
merger with BAE Systems in September. It is also a major barrier to EADS winning
defence contracts as a prime contractor in the US. The details of a potential
new ownership pact between the French and German governments are still unclear.
We do not, however, expect that a change in the shareholding structure will
reduce state influence to a level that would remove it as an obstacle in future
sector consolidation or in tendering for large defence contracts in markets like
Germany effectively controls 22.5% of EADS through Daimler (15%) and a
consortium of private and public investors (7.5%), while France controls the
same percentage through a 15% direct holding and a 7.5% stake held by Lagardere.
Press reports indicate that a new pact could result in the French and German
governments each directly holding a 12% stake in EADS, with Daimler and
Lagardere exiting the share register or reducing their stakes, while the Spanish
government would hold on to its current 5.5% stake.
Talks have reportedly been driven by Daimler's and Lagardere's long-term desire
to sell their stakes. Whilst we do not rate Lagardere, for Daimler the sale will
be positive for its finances in the short term by bolstering the company's
already solid net cash position.
This would not, however, lead to an upgrade for Daimler. The company's rating is
primarily dependent on its operational performance and its ability to
demonstrate that it has reduced the cyclicality of its truck business. In
addition, it is unclear how much of its stake Daimler will eventually sell, what
price it will achieve and whether it will reinvest the proceeds of any sale in
its business or return the cash to shareholders.