EADS SET FOR BUMPY RIDE INTO SPRING 2011 AS DAIMLER LOOKS TO DUMP SHARES (AGAIN)

Dino D'Amore
By Dino D'Amore February 9, 2011 17:08

EADS SET FOR BUMPY RIDE INTO SPRING 2011 AS DAIMLER LOOKS TO DUMP SHARES (AGAIN)

EADS looks set to have a rollercoaster ride on the markets once again in a repeat of the Daimler divestment attempt of 2007/2008.  Daimler is reported in German newspaper Frankfurter Allgemeine Zeitung to be interested in selling its stake in EADS when the current consortium agreement expires in June 2012. The German car maker, according to the report, wants to focus on its car manufacturing business without distraction.

You may recall that the EADS stake has been nothing but trouble for Daimler with, at one stage, the investment looking to be a massive burden on the company. As could be expected, the German government, on hearing the news, immediately went into crisis mode with some insiders saying that Chancellor Angela Merkel “definitely lost her cool on hearing the news”.

Merkel has already held an initial meeting about Daimler and EADS with Finance Minister Wolfgang Schäuble und Economy Minister Rainer Brüderle and is likely to call in Daimler in the near future.

Daimler has been trying to extract itself from EADS for four years now, in 2007 it reduced its stake from 22.5% to 15% and this provided Daimler with a huge net loss, the deal in the end had to be brokered by the German government with a German banking consortium. Early last year, Berlin tried but failed to find a long-term German investor to take over the banks’ stake, which agreed to extend the current arrangement for up to three years. Now that time is up, Daimler understandably.

So EADS is currently controlled by Daimler and the German banking consortium who own 22.5% in total, while the French government has a 15% stake, Lagardere 7.5% and the Spanish state holding SEPI, with a 5.47% stake.

You can bet that France and Germany will work no end to keep EADS as a joint venture with the shareholding firmly controlled by a near equal split between the two. But as we know the German and French governments are now in no position to start spending big, the banks will only move again if forced so all this leaves us in an amusing situation (from the outside) of seeing Germany scramble to save their percentage in the aerospace and defence giant while France looks on with dread.

Maybe the UAE or the Russians will show interest! Political mess on the way at EADS – Things must be getting back to normal!

Dino D'Amore
By Dino D'Amore February 9, 2011 17:08
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