Daimler AG To Book $3.44B Gains From EADS Holdings

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Daimler AG (ETR:DAI) (FRA:DAI) is expected to gain €2.7 billion or $3.44 billion from the re-evaluation of its remaining stockholdings in the European Aeronautic, Defence & Space Co. as the company decided to terminate its shareholder agreement with the airplane manufacturer within the next few days.

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Daimler AG is one of the founding members of EADS and helped the airplane manufacturer to become a global leader in the industry.

Based on the statement released by the company, the reevaluation of Daimler AG’s remaining shares in the European Aeronautic, Defence & Space Co. has no effects on its cash flow. According to the company, it has a positive impact of €1.25 to the earnings per share of the company in the fiscal 2013.

According to the Daimler AG (ETR:DAI) (FRA:DAI), the termination of its shareholder agreement means that that it will lose its significant influence over the business operations of the airplane manufacturer. In addition, the company said its Daimler’s EADS shares will no longer be measured using the “at-equity method” instead it will be calculated at its current, higher-stock market value.

The change in its accounting method resulted to an increase of €2.7 billion in second quarter EBIT of the Daimler AG (ETR:DAI) (FRA:DAI). That total amount of the gain include €1.35 billion from the 7.5% EADS shares held by Daimler and around €1.35 billion is related to the EADS shares held by the Dedalus consortium.

Daimler CFO Bodo Uebber said, “As founding member, we have successfully supported EADS on its way to becoming the global market leader over a period of more than ten years. At the same time, we want to focus our core business, so we intend to sell our remaining shares in EADS as we previously announced. No decision has yet been made on exactly when the shares will be sold.”

The company said the effects on the EBIT and EPS of Daimler AG (ETR:DAI) (FRA:DAI) were calculated based on the estimated EADS stock value at €38.

According to report from Bloomberg, Daimler sold already sold 7.5 percent of its stockholding in the EAD in December last year for $1.66 billion. Today, the shareholders of EADS approved the purchase of 15% of its stock for €50 per share to boost its value. EADS stock was trading around 39.78 euros at 4:53 p.m. in Paris.

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