June 10, 2016 / 11:25 AM / in 3 years

Airbus raises $2.7 billion from Dassault stake sale, bond issue

PARIS (Reuters) - Airbus Group (AIR.PA) said on Friday it had raised 2.4 billion euros ($2.7 billion) from share and bond sales designed to sever its 18-year connection with Dassault Aviation, unwinding its role as a custodian on behalf of the French government.

An Airbus A350 is pictured at the ILA Berlin Air Show in Schoenefeld, south of Berlin, Germany, May 31, 2016. REUTERS/Fabrizio Bensch

The European aerospace group said it had sold 1.33 million shares in the family-controlled maker of warplanes and business jets, of which 62 percent went to institutional investors and the rest to Dassault Aviation (AVMD.PA) itself.

The shares, representing a combined 14.55 percent of Dassault’s capital, were sold for 950 euros each.

Dassault shares rose 2.3 percent after the announcement to 992.5 euros. Airbus Group fell 1.1 percent to 52.81 euros, outperforming a weaker French market.

Airbus Group simultaneously issued a 1 billion euro 5-year, zero coupon bond exchangeable into Dassault shares. When fully redeemed, this would result in Airbus getting out of Dassault completely.

Airbus Group inherited the Dassault stake from former state-owned Aerospatiale when it was founded in 2000, along with a Paris headquarters building which has since been sold.

The French Government handed over a 46 percent stake in Dassault to Aerospatiale in 1998, just ahead of a series of restructuring moves that led to the creation of what was then known as EADS, and was eventually renamed Airbus Group.

Airbus Group held onto the stake on behalf of the French government, but state influence in the aerospace group has gradually been curtailed and Airbus has repeatedly said a sale of the Dassault shares was not a question of ‘if’ but ‘when’.

In 2013, it came under pressure from hedge fund TCI, which called the stake a poor use of capital and urged Airbus to sell.

Airbus Group strategy chief Marwan Lahoud said the deal was part of efforts to “focus on our core business and strategy”.

The world’s second largest aerospace group after Boeing (BA.N) has also been selling non-core defense assets as it focuses on civil and military aircraft, helicopters and space.

Dassault said the transactions would increase the public float to 24.9 percent from 15.8 percent.

The shares bought directly from Airbus Group have been earmarked for cancellation, which cannot happen before Dec. 23, it said in a statement.

BofA Merrill Lynch, BNP Paribas, Deutsche Bank, Goldman Sachs and J.P. Morgan were joint bookrunners on both the equity placement and the bond issue.

Reporting by Tim Hepher; editing by David Clarke

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