Berlin and Paris revamp strategic EADS holdings

The European Aeronautic Defence and Space Company (EADS), which owns plane maker Airbus, has unveiled a deal to restructure shareholdings meant to reduce the role of France and Germany but preserve their strategic interests.

Berlin and Paris revamp strategic EADS holdings
Photo: DPA

The agreement will leave France and Germany each with 12-percent holdings and Spain with about 4.0 percent, a statement said, as the German automaker Daimler and French conglomerate Lagardere curtailed their own key stakes. The deal is designed to allow EADS to function as an aerospace giant independent of intrusive government influence, and could pave the way for future growth.

“This agreement aims at normalising and simplifying the governance of EADS while securing a shareholding structure that allows France, Germany and Spain to protect their legitimate strategic interests,” an EADS statement said.

Chief executive Tom Enders told a telephone news conference that the deal represents “the most important change since the creation of EADS 12 years ago.”

Enders emphasised that no shareholder will be able to “directly or indirectly appoint board members,” to show how “government influence and capacity to interfere in the company will recede.”

EADS added that it would buy back up to 15 percent of its free-floating capital in the first half of next year, subject to market conditions, a move that would underpin the share price as Daimler and Lagardere sold their stakes.

EADS shares jumped by 2.46 percent to €27.73 on the Paris stock exchange, which closed before the announcement was made with a gain of 0.28 percent overall.

The agreement allows for the percentage of freely floating EADS shares to jump from 49 percent at present to more than 70 percent, the group said. A statement issued by the French presidency emphasised that the deal would “guarantee the interests of the French, German and Spanish states within the group.”

It would also give EADS “the freedom of movement it needs to pursue its development,” the French statement said, while underscoring that the group’s headquarters would stay in Toulouse, southern France.

EADS chief strategy and marketing officer Marwan Lahoud remarked that “moving the operational headquarters of the company is an operational decision” that “is decided by the board of directors.”

German Chancellor Angela Merkel welcomed the agreement meanwhile, saying in 1a statement that as a result, “the Franco-German partnership within EADS can advance in a balanced manner. The spirit that existed when the group was founded is thus respected.”

EADS was created in July 2000 via a merger of the German defence company DASA, France’s Aerospatiale-Matra and the Spanish group CASA.

According to the French presidency’s statement, the new agreement “reinforces the protection of the nation’s strategic defence interests via a specific agreement between EADS and the French state” that is expected to cover the group’s ballistic missile activities.

Sources close to French Economy Minister Pierre Moscovici highlighted a clause that would bar any new EADS shareholder from acquiring a holding of more than 15 percent.

Paris would also have a priority to buy shares in the French aerospace company Dassault, in which EADS owns a stake of 46 percent, should they be put up for sale.

Officials in Paris and Berlin have been exploring how to handle the exits of Daimler and Lagardere from EADS shareholding structure, a development that shakes up the original equity framework.

According to the EADS statement, the “present shareholder pact (is) expected to be replaced by a normal company governance scheme.” EADS, which is registered in the Netherlands, builds satellites, rocket launchers, helicopters and defence systems in addition to its main unit, Airbus.

The group recently tried to seal a tie up with the British defence group BAE Systems, but the talks fell through, reportedly owing to German concern that it would be sidelined within the merged entity.

Britain was said to be concerned about undue state influence over what would have become the world’s biggest aerospace and defence group.


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Meet the small German space mission that aims to improve life on earth

Holding its own against aerospace giants like pan-European Airbus Space or French-Italian Thales Alenia, Bremen-based minnow OHB has carved out a space as a national champion in satellite building.

Meet the small German space mission that aims to improve life on earth
Two satellites are manufactured in Bremen. Photo: DPA

Its latest coup was claiming a hefty slice of business from contracts signed in early July by the European Space Agency (ESA) as it builds up its Earth observation programme known as Copernicus.

Among the six new satellites, an OHB-built orbiter will keep an eye on carbon dioxide (CO2) emissions stemming from human activity over the coming decades.

The aim: offering policymakers the data they need to find ways of reducing greenhouse gas output.

“Some space missions are mostly relevant to science. At OHB, we like projects that help people in their everyday lives,” chief executive Marco Fuchs told AFP.

Thales Alenia may have secured the lion's share of ESA orders this time around, but OHB is “ideally positioned” to play a role in “permanent observation of the Earth in environmental, climate and security terms”, Fuchs said.

READ ALSO: 10 breathtaking views of Germany from space

Germany's aerospace sector claimed around 30 percent of the “Copernicus 2.0” business, or €800 million.

That shows it is “well equipped to be competitive internationally”, believes Thomas Jarzombek, a lawmaker who tracks aerospace issues for Chancellor Angela Merkel's CDU party.

The sector has also been abuzz in recent months as Germany signalled ambitions to significantly ramp up the industry.

Economy Minister Peter Altmaier raised hopes when he voiced support in October for a proposal from industry federation BDI to develop a space mission launch centre in Germany.

Family first

OHB's success with Copernicus was in part down to the laurels it earned working on Galileo, the ESA's other flagship programme offering satellite navigation to match the American GPS system.

The Bremen-based company with its 2,800 workers built around 20 of the satellites in the network.

Snatching that contract from under the nose of Airbus subsidiary Astrium in 2010 rocketed aerospace also-ran OHB into the ranks of top manufacturers.

When businesswoman Christa Fuchs bought the small company known as Otto Hydraulik Bremen in 1982, it had been repairing ships since its founding a quarter of a century before.

The satellites play a role in monitoring carbon emissions. Photo: obs/©OHB SE

But her husband, aerospace engineer Manfred Fuchs, joined the firm a few years later and piloted it off in a new direction — handing the controls over to his son Marco, a former corporate lawyer, in 2000.

The family holds 70 percent of the firm to this day, with the rest traded on the stock market and valued at a total €740 million.

The coronavirus pandemic has had an impact on OHB, prompting the company to give up on paying out a dividend to shareholders this year as well as performance-related bonuses or pay rises to staff.

But it is pressing on with new projects, including developing its own rocket at a site in the Bavarian city of Augsburg to deliver small satellites into orbit.

'Try something new'

Typical of Germany's industrial backbone of successful small and medium-sized firms, OHB has resisted plans of French Economy Minister Bruno Le Maire to bolt it together with France's Arianegroup and Italy's Avio.

“Merging Arianegroup and OHB would not improve the EU's space industry,” CEO Fuchs insists.

OHB itself has meanwhile set its sights on other related projects.

READ ALSO: Meet the Germans who want to move to Mars

Marco Fuchs argues that “the EU should try something new… in the telecommunications space”.

“Europe needs its own network of versatile satellites, like those being built by competitors like Project Starlink of Space X or Kuiper by Blue Origin,” he said.

Billionaire Elon Musk's Starlink programme and Amazon mogul Jeff Bezos' Kuiper aim to deliver connectivity to the remotest locations on land and sea.

Fuchs' plans may well fit the EU's ambitions.

European Commissioner Thierry Breton recently told France's Le Figaro daily that he would “very soon” propose plans for the EU to become more independent in broadband internet.

By Jean-Philippe Lacour