Maintains Franco-German Balance of Power
DaimlerChrysler said Friday it sold
a third of its stake in European Aeronautic Defense and Space Co.
(EADS), the parent company of planemaker Airbus, to a private
investment group in a deal that will maintain the balance between
German and French shareholders in a $1.95 billion deal.
The world's fifth-biggest automaker, DaimlerChrysler said the
deal, which has been in the works for months, would reduce its EADS
stake to 15 percent but leave it with the voting rights on the full
22.5 percent. The company says it wants to focus on its core
businesses, reported Reuters.
"This allows us to focus more on our automotive business,"
DaimlerChrysler spokesman Thomas Fröhlich told Reuters. "It's
a strategic rationale not a financial one."
The consortium buying DaimlerChrysler's shares groups seven
private-sector investors, including the German insurance group
Allianz, and the banks Commerzbank, Deutsche Bank and Credit Suisse
and Goldman Sachs.
Eight public-sector investors are also involved, including KfW,
the state-owned development bank, and the states of Hamburg, Bremen
and Lower Saxony. The states buying into EADS are home to
significant Airbus production facilities; local politicians have
been lobbying to protect jobs.
DaimlerChrysler talks included German and French officials,
along with EADS' Spanish shareholders, and were focused on how to
reduce its stake without upsetting the balance of national
representation in the company, which also produces military
hardware for European countries, reported the International Herald
Tribune.
The deal is designed to safeguard German influence in EADS at a
time of major restructuring that could cost thousands of jobs at
its Airbus subsidiary.
"The key motive (for DaimlerChrylser) is a political one," said
Konrad Becker, an analyst at Merck Finck & Co. in Munich, who
covers financial companies including Allianz, Deutsche Bank and
Commerzbank. "Of course, they're also hoping they'll make a profit
on the investment."
Merkel said on October 12 the German government needed to "lend
political support" to EADS's reorganization plans. By ensuring that
German states and banks bought the DaimlerChrysler share, the
government helped make certain German influence at the company and
balance the influence of French investors, who have a combined
stake of 22.5 percent.
"The solution makes sense for the government from an industrial
and political point of view," said Merkel's chief spokesman, Ulrich
Wilhelm. "We succeeded in securing the Franco-German balance in the
voting system."
A German government spokesman said Daimler's deal should
strengthen Germany's hand in talks over the restructuring amid
union fears of up to 10,000 job cuts. EADS is expected to unveil
details of its Power8 restructuring plan on February 20.
French Prime Minister Dominique de Villepin met the co-chief
executive of EADS and head of Airbus, Louis Gallois, Friday. He
reiterated to Gallois the importance of evenly splitting any Airbus
job cuts between countries, Villepin's office said. Germany's
economy minister, Michael Glos, will see Gallois next week.
The DaimlerChrysler sale
comes as Airbus is set to report its first every loss because it is
running two years late in deliveries of the 555-seat A380,
Bloomberg reported. EADS has said it will have operating losses of
(US)$6.24 billion between 2006 and 2010 because of mounting costs
on the A380 and penalty payments to A380 customers.
Airbus's German workers have already
threatened to slow production and deliveries if jobs
are cut. On February 5, production workers walked off the job at
four of Airbus's seven German factories to demonstrate their
opposition to what they estimated were as many as 8,000 of Airbus's
19,000 jobs being in the crosshairs in Germany.
Airbus hasn't specified yet whether or how many jobs will be
cut. After the cost overruns and delays on the A380, the company is
seeking to slash (US) $2.7 billion from annual costs by 2010.