Recent US Takeover Bids Scuttled By Franco-German Shareholder

The European Aeronautic Defense and Space Company, EADS, is looking to invest in the US in order to reduce its exposure to a weaker dollar, chief executive Louis Gallois told the Financial Times.

"My main concern for the future is the weakness of the US dollar," he said. "It is a sword of Damocles hanging over our heads and it is a fantastic handicap against our only competitor in commercial aircraft."

Gallois adds US acquisitions, as well as partnerships and alliances, had been identified as targets for 'Vision 2020', a recently agreed corporate strategy that is to be presented soon to employees.

A takeover move considered by EADS had been blocked by a controlling shareholder on the grounds that the Franco-German group could have lost management control of the operation, according to Gallois.

Lagardere SCA blocked a bid by EADS for United Industrial Corp. as reported by French daily Les Echos last month.

"We know it is not easy to manage a US company when you are a European one, but we have to get access to the American market, to produce in US dollars, and for that we must increase our footprint in the US,” Gallois said.

The Vision 2020 strategy also calls for EADS to achieve a better balance between commercial aircraft division Airbus and other activities, including defense, space, helicopters and services.

Airbus currently accounts for 64 percent of EADS sales, compared with the 47 percent for commercial aircraft activities at Boeing, and EADS notably wants to boost the share of services in sales from 10 percent to 20-25 percent.

Recent corporate governance changes have eased decision-making at EADS.

"For day-to-day operations it is a fantastic improvement. At the level of the executive committee we are in a new world,” Gallois said.

FMI: www.eads.com