The government in Berlin is planning to purchase half of industrial conglomerate Daimler's shares in European aerospace giant EADS in order to ensure that the German holdings do not fall into the hands of foreign investors. The Economics Ministry announced Wednesday that 7.5 percent of the company's shares would be purchased through the government-owned KfW investment bank. A further 7.5 percent of Daimler's shares were parked at a number of banks several years ago in a deal the German government helped to broker. The shares are estimated to have a market value of between €1.2 billion and €1.3 billion ($1.62 billion and $1.76 billion). The Economics Ministry said the deal could not be completed prior to June 30, 2012 because of unresolved legal questions in the Netherlands. The air, space and defense firm is officially based in Amsterdam. On Wednesday, EADS did not comment publicly on the sale. "It has already been known for some time that we are in talks with the government, and we will make a statement on it at the appropriate time," a Daimler spokesman said. Sources within the Economics Ministry said the sale would ensure that the balance of power between Germany and France is preserved within EADS. KfW is also expected to maintain only temporary ownership of the shares, and the search for private investors is to continue. EADS was created in 2000 through the merger of aerospace firms in Germany, France and Spain. France and Spain are both owners in the company through state holdings. Since the European company's creation, the balance of power between shareholder countries has played a major role in EADS' development. United States diplomatic cables obtained by whistle blower platform WikiLeaks that were reported on in March provided insight into the conflict-ridden relationship between German and French employees at EADS. The company is best known abroad as the manufacturer of the highly successful Airbus line of commercial jets, a strong European competitor to America's Boeing.
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Sunday, November 13, 2011
The government in Berlin is planning to purchase half of industrial conglomerate Daimler's shares in European aerospace giant EADS in order to ensure that the German holdings do not fall into the hands of foreign investors. The Economics Ministry announced Wednesday that 7.5 percent of the company's shares would be purchased through the government-owned KfW investment bank. A further 7.5 percent of Daimler's shares were parked at a number of banks several years ago in a deal the German government helped to broker. The shares are estimated to have a market value of between €1.2 billion and €1.3 billion ($1.62 billion and $1.76 billion). The Economics Ministry said the deal could not be completed prior to June 30, 2012 because of unresolved legal questions in the Netherlands. The air, space and defense firm is officially based in Amsterdam. On Wednesday, EADS did not comment publicly on the sale. "It has already been known for some time that we are in talks with the government, and we will make a statement on it at the appropriate time," a Daimler spokesman said. Sources within the Economics Ministry said the sale would ensure that the balance of power between Germany and France is preserved within EADS. KfW is also expected to maintain only temporary ownership of the shares, and the search for private investors is to continue. EADS was created in 2000 through the merger of aerospace firms in Germany, France and Spain. France and Spain are both owners in the company through state holdings. Since the European company's creation, the balance of power between shareholder countries has played a major role in EADS' development. United States diplomatic cables obtained by whistle blower platform WikiLeaks that were reported on in March provided insight into the conflict-ridden relationship between German and French employees at EADS. The company is best known abroad as the manufacturer of the highly successful Airbus line of commercial jets, a strong European competitor to America's Boeing.
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Berlin Says It Will Not Seek Direct Influence at EADS
The government in Berlin had been under pressure to make a decision on the deal this week because parliament is currently finalizing the 2012 budget. Daimler had also been pushing for clarity on the future of the shares by year's end. The automobile manufacturer is expected to continue to control Germany's 22.5 percent of EADS' voting rights.
An alternative deal by the Qatar sovereign wealth fund to invest in EADS had been rejected earlier following negotiations between German Economics Minister Philipp Rösler of the business-friendly Free Democratic Party (FDP) and the Arab country. Sources within the government indicated an investment by a foreign sovereign wealth fund would have been a "difficult message to convey" in terms of German industrial policy. Unable to line up a suitable private investor, Chancellor Angela Merkel's office is reported to have long supported the KfW solution.
Government sources also said the government in Berlin does not intend to have direct influence on EADS' business operations, despite its planned shareholding. Nor does the government plan to seek any seats on the supervisory board.
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