EADS has signed a strategic co-operation agreement with a unit of Chinese manufacturing giant China Aviation Industry Corporation II (AVIC II) that includes the purchase of a 5% stake.
The 5% stake in AVIC II spin-off company AviChina Industry & Technology is to be acquired for up to €30 million ($35 million), says EADS, depending on the final pricing of the company's planned initial public offering (IPO) in Hong Kong.
State-owned AVIC II has been working to list shares in Hong Kong for some time and earlier this year established AviChina as its international listing vehicle. AVIC II focuses on defence work and automobiles, as well as production of helicopters, regional passenger aircraft, general aviation aircraft and aviation components.
AVIC II will retain majority ownership of AviChina after the Hong Kong IPO, while EADS will be its second-largest shareholder. Defence businesses have not been injected into the company but many automobile businesses have. These will account for most of the total turnover.
EADS says the AviChina agreement, signed in Hong Kong on 17 October, gives it the right to appoint a non-executive director to the company's board. It adds that AviChina's operating profit amounted to 843 million yuan ($102 million) in 2002 on revenues of 11.3 billion yuan.
AviChina's flotation is expected to raise around HK$1.9 billion ($245 million) and the company's shares are due to start trading on the Hong Kong stock exchange at the end of October.
EADS already has extensive ties with AVIC II subsidiaries, largely in the helicopter market through Eurocopter, including on co-production of the EC120.
Source: Flight International
