AMSTERDAM (Reuters) - The Dutch government in recent days has stealthily built up a 14 percent stake in Air France KLM, which it said was needed to protect Dutch interests from growing French dominance in the airline group.
Here is a look at how and why the government acquired its stake, staying under the radar until unexpectedly revealing its operation at a press conference on Tuesday night.
Air France took over KLM in 2003 when the Dutch airline was struggling. But the two have continued to operate independently, with agreements in place to ensure that both Paris Charles de Gaulle and Amsterdam Schiphol airport would remain important hubs for the group.
The Dutch government, however, grew increasingly worried about the future of KLM and Schiphol, as Dutch influence in the group waned and new chief executive Ben Smith aimed to further integrate the two airlines.
The Dutch government said on Tuesday it had been contemplating taking a direct stake in Air France KLM since the end of 2014, and had now decided the step was necessary to ensure that Dutch interests would be taken into account at the group level.
The Dutch state had held on to a 6 percent stake in KLM since the merger with Air France, but until last week held no shares in the Air France KLM group.
The Dutch government last week ordered Dutch bank ABN Amro, which is still 56 percent state-owned following its 2008 bailout, to start acquiring Air France KLM shares on the open market and directly from private investors.
ABN Amro started buying on Feb 20, launching a race against the clock to line up as many purchases as possible before the state would be obliged to report its stake to French market authorities and would have to make its intentions public.
This eventually happened on Tuesday Feb 26, when the government’s stake passed the minimal disclosure level of 5 percent and then rapidly rose to 12.68 percent, forcing the government to reveal its plans at a hastily announced evening press conference.
By Wednesday evening, the government said it had amassed a share of 14 percent, at a total cost of 744 million euros ($846 million), and that the buying of shares had stopped.
The French government had only been informed about the Dutch operation shortly before the press conference, while members of the Dutch parliament were also kept in the dark until Tuesday.
In hindsight, ABN’s stealth buying operation was visible in a significant spike of trade volumes, taking the number of shares changing hands from an average long-term daily volume of around 4 million to between 10 and 17 million per day in the period from Feb 20-26.
Air France KLM’s share price meanwhile rose more than 20 percent, from around 10.40 euros on Feb 19 to 12.73 euros on Feb 26.
In total, 57.2 million shares were traded between the moment ABN started buying on Feb 20 and the Finance Ministry’s press conference on Tuesday evening, among the largest volumes over a sustained period on records going back to the 1990s.
Reporting by Bart Meijer; Additional reporting by Josephine Mason; Editing by William Maclean and Jan Harvey