Daimler, the German automobile maker, today sold half of its stake in European aerospace giant EADS (European Aeronautic Defence and Space) in a deal worth €1.7 billion; equivalent to $2.2 billion.
The move by Daimler AG (FRA:DAI) (PINK:DDAIF) (ETR:DAI) is part of a larger shake-up in the ownership structure of the aerospace defence company, which is the largest in Europe. Yesterday it was announced that Germany will buy a substantial stake of 12 percent in the company. Spain will also hold a four percent stake.
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EADS and British aerospace company BAE Systems plc (LON:BA) (PINK:BAESY) were in talks to create a merger earlier in the year, but discussions of the multi-billion dollar deal were scuppered because of political divisions between Germany, France, and the UK. Had the deal gone ahead, the resulting company would have had a market value of $45 billion – just shy of Boeing’s value.
Daimler AG (FRA:DAI) (PINK:DDAIF) (ETR:DAI) announced today that it had already sold half of its 15 percent holding in EADS NV (EPA:EAD), at a price of €27.23 per share ($35.60) – the Wednesday closing price of EADS. A number of investors have purchased shares, including the state-owned German bank KfW.
The sale of shares by Daimler AG (FRA:DAI) (PINK:DDAIF) (ETR:DAI), the automaker company behind Mercedes-Benz, and French company Lagardére is intended to dissolve a decade-old agreement between Paris and Berlin which gave them effective veto over management decisions at the company.
Lagardére – a French defense and media company that currently holds a 7.5 percent stake in EADS – is also expected to reduce its stake in the company through a share-buyout programme.
The resulting ownership structure will result in KfW owning a combined 12 percent stake in EADS, while France reduces its ownership to 12 percent down from 15 percent. A Spanish government holding company will also be reducing its shareholding down to four percent from roughly 5.5 percent. The German government will at the same time purchase a 12 percent stake in the company.
The deal will be the first time the German government has direct ownership of the company, rather than through Daimler.
EADS NV (EPA:EAD) CEO Thomas Enders called the changes to the shareholder ownerships the “most important change since the creation of the company 12 years ago.”
EADS NV (EPA:EAD) said the shake-up will “simplify the governance” while allowing the state shareholders to “protect their strategic interests,” while The French government said the deal would ensure “the projection of the strategic interests of national defence.”
Paris’ morning trading today saw shares in EADS rise to €29.25; up by 7.6 percent.