December 22, 2014 / 2:18 PM / in 3 years

Thales CEO succession stalled as shareholders split: sources

PARIS (Reuters) - Thales’ (TCFP.PA) top shareholders are at odds over its plan for a dual leadership structure that may change their influence at the French defense electronics maker, sources familiar with the matter said on Monday.

The logo of French defence and electronics group Thales is seen on the building of the company's headquarters in Neuilly, near Paris, May 20, 2008. REUTERS/Charles Platiau

The disagreement between the French government, Thales’ top shareholder with 26 percent, and Dassault Aviation (AVMD.PA), which holds 25 percent, has prompted the company to postpone a board meeting scheduled for Monday, the sources said.

The board had been expected to replace outgoing chairman and chief executive Jean-Bernard Levy with former EDF (EDF.PA) boss Henri Proglio as non-executive chairman and Levy’s second-in-command Patrice Caine as CEO.

The arrival of Proglio and Caine would require changes to the composition of the board, with the French state calling on Dassault to give up one of its seats to make room for Proglio, the sources said.

Dassault is refusing, however, as the loss of one of its four seats would create an imbalance in the face of the government, which would keep five, one of the sources said. Thales’ board has 16 members in total.

“In a way, the fact there is a discussion on this precise point means that we’re starting again from scratch,” one of the sources said.

“There isn’t a discussion on the choice of Henri Proglio as such, but the problem of the composition of the board of directors could bring into question his nomination, and indirectly that of Patrice Caine.”

The issue may now not be resolved before January, the sources said.

The government and Dassault have been in talks for several weeks over the succession of Levy, who has resigned from Thales to run EDF, France’s top power firm. Thales named group secretary Philippe Logak as interim chairman and CEO in November.

Two sources close to the matter said on Sunday that Thales was set to name Proglio and Caine as Levy’s replacements following a board meeting at 1700 GMT on Monday but that talks between shareholders over the change to a dual leadership structure might delay the meeting.

The French government and Thales declined to comment. Dassault was not available for immediate comment.

Editing by Jason Neely and Louise Heavens

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