German Government to Buy EADS Stake from Daimler image

The German Government yesterday agreed to buy a 7.5 percent equity interest in the European Aeronautic Defence and Space Company N.V. (EADS) from Daimler, maintaining a Franco-German balance of influence over the aerospace company.

The sale is slated to take place in 2012. A letter of intent to that effect is to be signed by State-owned development bank KfW Group and Daimler AG before the end of this year. The shares are worth €1.22 billion, or $1.66 billion, at current market prices.

“We are in agreement with the federal government: The establishment of EADS was one of the pioneering achievements among European industrial projects in a strategically highly important and sensitive sector. Due to the strategic importance of EADS, the government has decided to safeguard the German-Franco balance through its investment by KfW bank group.

As a result, one of the decisive factors for the success of EADS is maintained and an equivalent shareholder structure between the two sides is achieved,” stated Bodo Uebber, Member of the Board of Management of Daimler AG for Finance & Controlling and Daimler Financial Services.

Daimler AG says it currently holds a 15 percent equity stake and 22.5 percent of the EADS voting rights, and it is set to “retain 15 percent of voting rights and industrial leadership” after the sale to KfW.

The maker of the S Class premium sedan said it is selling the stake to pursue the strategy of focusing on its core automotive business, which it has been consistently doing for several years now.