Analysis: EADS revamp brings government out of industry's shadow

Sun Dec 2, 2012 2:12pm EST
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By Tim Hepher

PARIS (Reuters) - An imminent shake-up of EADS EAD.PA is expected to lead to a rise in state shareholdings in Europe's largest aerospace group, but in reality merely changes the rules for what is already a wary co-habitation.

Officials were putting finishing touches on Sunday to a deal to bring Germany on board with 12 percent of the maker of Airbus jets and Ariane rockets, at parity with France.

The move paves the way for an exit by founder companies Daimler (DAIGn.DE: Quote), the German carmaker, and French media firm Lagardere (LAGA.PA: Quote), increasingly viewed as state proxies.

Germany has not been a shareholder until now while France previously allowed itself to be represented by Lagardere. Spain will continue to hold up to 5.5 percent, leaving combined government shareholdings close to 30 percent and a larger float.

It is not the pure-market solution EADS Chief Executive Tom Enders, a critic of state interference, might have wanted.

But experts say it will clear the air by getting rid of a complex shareholder pact between France, Lagardere and Daimler in which it was not always easy to see who pulled the strings.

For critics of state involvement, an example of the risks now facing EADS unfolded even as the details were being worked out. The French government struck a deal for investment in a steel plant after publicly threatening its nationalization.

Few are in a better position to reflect on the love-hate relationship between state and industry than the plant's owner, Indian-born steel tycoon Lakshmi Mittal, head of ArcelorMittal.   Continued...

Visitors look at aircraft models at the EADS booth during the ILA Berlin Air Show in Selchow near Schoenefeld south of Berlin, September 13, 2012. REUTERS/Tobias Schwarz