German government to buy Daimler’s EADS stake

Article by Christian A., on November 12, 2011

No private investor was found and so the German government agreed to purchase a 7.5% stake in European Aeronautic Defence and Space Co. This guarantees that its influence over Europe's largest defense company continues to be on par with France. The Economy Ministry said that in 2012, the state-owned development bank KfW Group will acquire the shares worth 1.2 billion euros ($1.6 billion) from Daimler AG.

It will hold the shares until the parties reach a long-term solution. With the deal, Daimler will halve its direct holding in EADS to 7.5% from 15%. It’s expected that by the end of 2011, the automaker and KfW will be signing an agreement.

In a statement, Chief Financial Officer Bodo Uebber, who is also EADS's chairman, said that because of the strategic importance of EADS, the government has decided to protect the German-Franco balance. For several months, Daimler and EADS have been urging the government to find a buyer for at least a part of its holding as Daimler pushes cash into developing vehicles.

The German government led by Chancellor Angela Merkel put off a decision on what will become of the EADS stake, the parent of Airbus. It has spent many months to look for a potential investor in German industry or even in Qatar. Later on, those who supported and opposed having the state involved agreed that Germany's top interest was to keep its control equal to that of France under the deal that formed the company. [source: Autonews]

Topics: daimler, germany

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