The French and German governments have agreed to reduce their shareholdings in EADS to 12 percent each, and drop their veto rights over key decisions. Spain will hold 4 percent. EADS said the pact will normalize and simplify its governance, while still allowing the three countries “to protect their legitimate strategic interests.”
EADS will buy back up to 15 percent of outstanding shares, effectively including most of those that are currently held by Lagardere and Daimler on behalf of the French and German governments. The “free float” of EADS shares available to other investors will eventually rise to 72 percent from 54 percent. An extraordinary general meeting will be held during the first half of next year to formalize the changes and elect new governors. France and Germany will each have two seats on the new board, which comprises a total of 12 members. Since the board will have “at least eight independent non-executive directors,” according to EADS, it seems likely that the French and German governments, perhaps in rotation, will continue to nominate the company’s chairman and CEO positions.
At the same time, EADS said it has agreed to “consult with the French State” before voting its 46-percent stake in Dassault Aviation at shareholder meetings of the French company. EADS has also offered the French government a right of first offer/first refusal on all or part of this shareholding. The Dassault family company still owns a controlling 50.55 percent of the French airframer.
Tom Enders, CEO of EADS, said, “We are making a big leap forward…strategy and industrial projects in the future will be solely defined and decided by the board of directors and executive team…without any outside interference from specific shareholders. At the same time, the company will take care of legitimate national-security interests of governments through appropriate undertakings.”
The agreement has inevitably fueled speculation that EADS and BAE Systems will eventually make a second attempt to merge. The first attempt failed last October after both companies fell foul of shareholders and governments.