The vexed question of shareholdings in EADS resurfaced last week with a Financial Times report indicating the German government is finally prepared to step in where no private buyers dare to tread - and relieve Daimler, the national industrial champion best known for its Mercedes-Benz cars, of some of the burden of holding the country's interest in the Franco-German alliance behind the Airbus, Eurocopter, Astrium space and Cassidian defence businesses.
Berlin rapidly denied the report and EADS declined to comment - insisting, as it invariably does, that it is a matter for shareholders. However, the fact remains that the French and German national shares in EADS have been a recurring theme all year, raised whenever the company's financial performance or governance is discussed.
Daimler, whose aerospace division formed the core of the German pillar of EADS when the Airbus, Eurocopter and Astrium parent was formed a decade ago out of French, German, Spanish and UK national aerospace companies, has remained Berlin's proxy holder of the 22.46% German share of the company.
France's 22.46% is split between the state and media group Lagardère. Most of the rest is freely traded.
The car and truck maker, however, wants out, to focus on its automotive business and, at least according to FT sources apparently inside the German government, political opposition to nationalisation is weakening, so a €2.5 billion ($3.5 billion) deal to buy 15% of EADS during the next year or so may be on the cards.
Such nationalisation would still leave 7.5% with Daimler.
Earlier this year, Daimler finance chief Bodo Uebber - who doubles as EADS chairman - said the company intends to retain "industrial leadership" of Germany's interest in the aerospace giant.
The shareholding structure is looking increasingly anachronistic, and is clearly under strain. The two countries control equal shares, by mutual agreement, partly to ensure workshare remains roughly balanced between them and partly to protect what is regarded as a crucial industrial interest from hostile foreign takeover.
However, Lagardère is also known to want an exit from EADS. Its businesses are otherwise in media and advertising, and the group is struggling financially in a dire media market.
Daimler and Lagardère may want out, but there is no great imperative for Paris or Berlin to grapple with the EADS problem.
Many German politicians are opposed to nationalisation in principle. The French, in contrast, have a long history of holding state stakes in companies deemed to be national champions.
Moreover, as Royal Bank of Scotland equities analyst Sandy Morris told Flight International earlier this year, it would be better to talk about selling large stakes in EADS late next year, when it becomes clear whether or not the Airbus A350 project is running smoothly.
Morris stressed that while investors want more EADS shares to be freely traded, they mostly want this "evolving" company to continue successfully developing aircraft, particularly the A350.
Nevertheless, a problem looms for Germany. To assuage Daimler's concerns, a consortium of German banks has been holding 7.46% of the company - about a third of the Daimler shareholding. However, those banks expect to be bought out in the next year or so and the FT report was in part based on an apparent realisation in Berlin that neither financial nor industrial buyers are to be found.
EADS is not very profitable and pays meagre dividends (see chart), but potential buyers are also thought to be reluctant to get involved with a company that carries so much political baggage.
In any case, EADS itself is agitating for change. Though vastly more streamlined than when it was formed - a management structure that demanded co-chief executives and co-chairmen, one French and one German, was abandoned in 2007 in favour of a more typical single-heads regime - chief executive Louis Gallois has said the state holdings need to be reduced to give management greater freedom to address the challenges of EADS' second decade.
As far back as January, in his annual state-of-the-company briefing, Gallois took aim at the politicians in Berlin and Paris who continue to exert what many consider undue influence over a company.
EADS, he said, will always have its roots firmly fixed in Europe but must structure itself to play an increasingly global aerospace game.
"Our duty is to prepare the company for a new world," he said.
Source: Flight International
