April 26, 2013 1:00 pm

France moves quickly to cut stake in EADS

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France has moved more quickly than expected to reduce its shareholding in EADS to 12 per cent, cutting political interference in Europe’s largest aerospace group.

On Friday France raised €700m by selling a 2.1 per cent stake through a private placement, bringing its stake down to the 12 per cent level set by a new shareholder agreement.

The sale brought to €1.19bn the amount raised by the state following the buyback this month by EADS, the maker of Airbus airliners, of a further 1.5 per cent share held by France.

President François Hollande’s Socialist government, under severe budgetary pressure, has stepped up moves to sell off non-core parts of the state’s big industrial holdings – although it has stopped far short of a full privatisation programme.

Pierre Moscovici, finance minister, said in a statement that the EADS sale was part of a plan of “active management” of state shareholdings to raise capital for investment in “new sectors supporting economic development”.

But he stressed the government’s intention to preserve its “patrimonial and strategic interests” in big companies, which include industrial heavyweights such as EDF, the electricity group, utility GDF Suez, and Renault, the carmaker.

France had agreed earlier this year to reduce its active EADS stake to 12 per cent in a corporate governance shake-up that involved Germany holding a matching 12 per cent and Spain taking 4 per cent. France had originally signalled it would hold on to its surplus stake but not vote the shares, but subsequently it decided to sell them.

Under the shareholder agreement, Paris and Berlin also gave up vetoes on board appointments and other key decisions as Tom Enders, EADS chief executive, pushed to normalise governance of the multinational group.

France and Germany had previously controlled 22.5 per cent each, with the French state’s direct stake topped up by the 7.4 per cent share held by Lagardère, the media group. Most of the German stake was held by Daimler, the carmaker.

The new shareholder deal paved the way for Daimler and Lagardère to sell their remaining EADS stakes back to the company in a buyback worth a total of €3.75bn.

EADS shares were down almost 2 per cent in morning trading on Friday at €39.88 on news of the French sale, but overall the shares have risen sharply since the company abandoned a mooted tie-up with Britain’s BAE Systems late last year and embarked on the governance changes.

The French state and Daimler and Lagardère sales removed much of the uncertainty in the market over the effect of the disposal of their holdings.

Kepler Capital Markets said in a note: “There could be a negative and purely technical impact on the share price today but the EADS equity story will now shift back to operational considerations.”

It added: “We are still surprised by the speed at which all these placements were made. This puts some pressure on EADS’ shoulders to deliver operational performance in a stellar way.”

In the latest deal, France said it placed 17.6m EADS shares, realising €707m. Bloomberg reported the shares were offered at €40.20. The Lagardère buyback was completed at €37.35 per share.

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