By David Pearson
FARNBOROUGH, England--Ministers from France and Germany said Monday they expect to change the shareholder structure of European Aeronautic Defence & Space Co. (EADSY, EAD.FR) by year-end to allow industrial group Daimler AG (DDAIY, DAI.XE) to reduce its stake while preserving the delicate balance of power between French and German interests in the company's governance.
France and Germany would continue playing a significant role in the company, the ministers said. EADS's new chief executive, Tom Enders, has frequently said the company would be better off without state influence, arguing that in the U.S. and U.K., the state protects its strategic interests in the defense sector without holding equity in defense contractors.
Peter Hintze, parliamentary state secretary in Germany's Ministry of Economics, reaffirmed that Germany intends to keep the balance of power inside EADS as it is, though he didn't exclude that the respective French and German shareholdings could be reduced at some point in the future.
"The German government has repeatedly said that it has an interest to keep the shareholder balance at EADS as it is," Mr. Hintze told a press conference at the Farnborough International Airshow.
However, he also noted that "if the French government were to say they are interested in reducing its stake, Germany would be happy to go along."
However, French Transport Minister Frederic Cuvillier said his preference is that the state must preserve its interests where they lie. "A state has a strategic interest to get involved, to accompany, create conditions and negotiate. Reducing the role of the state isn't on the agenda. I'm not there to reduce the role of the state where it exists. That's neither our philosophy nor our policy. Indeed, it's quite the reverse."
Hintze commented that "EADS's importance is stronger for the French economy than it is for Germany, which has market-leading positions in many other industries like the chemicals or engineering sectors."
French and German interests currently each control 22.35% of EADS's capital. On the French side the holding is represented by Sogeade, a specially created holding company that's two-thirds controlled by the state and one-third by the Lagardere SCA (MMB.FR) media group. German industrial group Daimler currently controls 22.5% of the voting rights of EADS, but has lodged a 7.5% stake with a consortium of private and public-sector investors and wants to exit the aerospace company completely.
The German government, meanwhile, wants to transfer 7.5% of Daimler's stake to a public-sector bank.
Hintze said the issue of changes in EADS's shareholding structure will be done in an "orderly" way in the coming months, noting that because EADS is a Netherlands-registered company Dutch law will have to be taken into account.
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