Less than two months after the German state scotched the proposed US$45bn merger with BAE Systems, EADS chief executive Tom Enders has managed to persuade his government shareholders to lessen their influence on the company.
Both the board of directors…
Less than two months after the German state scotched the proposed US$45bn merger with BAE Systems, EADS chief executive Tom Enders has managed to persuade his government shareholders to lessen their influence on the company.
Both the board of directors and core French, German and Spanish shareholders of the European aerospace giant have agreed to significant changes in the company’s ownership structure and governance. The ultimate aim of this agreement is to normalise and simplify the governance of EADS while increasing its free float to more than 70%.
Under the proposed changes, which are due to be voted on at an EGM in the first half of 2013, France and Germany will build equal ownership positions in EADS of 12% each with Spain holding a 4% stake.
The countries have agreed on a capped total governmental shareholding of 28% and an amendment in EADS’ articles of association that would restrict the ownership and voting threshold for both individual and collective shareholders to 15%.
In addition, under the new governance scheme, no veto right will be given to any shareholders or directors at the shareholders’ meeting.
All of this will be firmed up by the cancellation at the EGM of the ‘Participation Agreement’, the present shareholder pact that has been in place since the company’s foundation in 2000 and gives the countries certain control and veto rights. In its place will be a new limited arrangement between the three governments.
In order to undertake the planned change in EADS’ equity structure, a series of share sales and buy-backs are due to take place over the next six months.
The first of these took place on 6 December, when German car group Daimler AG sold 61.1 million shares in EADS, representing 7.5%, at €27.23 per share in an accelerated bookbuild raising approximately €1.66bn.
As previously agreed, German state bank KfW purchased a 2.76% stake through the sale, while private investors in the Dedalus Consortium acquired 1.9% of the EADS shares as part of the transaction. The remainder was bought by international investors.
Goldman Sachs and Morgan Stanley acted as joint bookrunners for the placement.
KfW now intends to purchase the privately-held interests in Dedalus and once this has taken place, the state-owned bank together with other German public entities will owned a total of 10.2% in EADS.
The next step will follow the EGM and will see EADS implement a share buyback and cancellation program of up to 15% of the share capital of the company. The transaction is to be carried out in two equal and simultaneous tranches.
The first trance will be worth up to 7.5% of EADS and is open to all shareholders currently in the free float. The second tranche of up to 7.5% is reserved exclusively for French media group Lagardère.
Upon completion, the anticipated and simplified shareholder structure will be: the French state (via its SOGEPA investment vehicle) with 12%; the German state (via KfW and other German public entities) with 12%; the Spanish state (via its SEPI investment vehicle) with 4%; a free float of 72% that includes any remaining stakes of Daimler and Lagardère.
Commenting on the plan, Enders said: “Today is a good day for EADS! We are making a big leap forward in terms of governance, actually the most important change since the creation of our company more than 12 years ago.
“Strategy and industrial projects in the future will be solely defined and decided by the board of directors and the executive team, the operations will be managed without any outside interference from specific shareholders or shareholder concerts. At the same time, the company will take care of legitimate national security interests of governments through appropriate undertakings.
“The new shareholder structure allows for a significant increase in the free float of shares. Our intention for a major share buy-back next year, based on our strong liquidity position, will benefit all shareholders.”
