France, Germany on verge of deal to shake up EADS

BERLIN/PARIS Sun Dec 2, 2012 7:32pm GMT

Visitors look at aircraft models at the EADS booth during the ILA Berlin Air Show in Selchow near Schoenefeld south of Berlin, September 13, 2012. REUTERS/Tobias Schwarz

Visitors look at aircraft models at the EADS booth during the ILA Berlin Air Show in Selchow near Schoenefeld south of Berlin, September 13, 2012.

Credit: Reuters/Tobias Schwarz

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BERLIN/PARIS (Reuters) - France and Germany held talks on EADS EAD.PA over the weekend and appeared very close to agreeing a new shareholder structure for Europe's largest aerospace group, people familiar with the matter said.

One person briefed on the Paris talks said they focused on capping state shareholdings in EADS at 30 percent, giving France and Germany voting shares of 12 percent each and Spain a voting share of 4 percent inside a core state shareholder group.

This would leave a 2 percent buffer of voting stock that states could still possibly acquire later, the person said, echoing a report in Frankfurter Allgemeine Zeitung (FAZ).

Spain currently owns 5.5 percent.

Under Dutch law that governs EADS, a group of shareholders cannot control more than 30 percent of the votes without triggering a mandatory bid for the whole company.

FAZ said talks were also looking at what level of state representation there could be on the company's board, with suggestions of two places each for France and Germany and one for Spain.

The new arrangement is due to be put to shareholders in the spring of 2013, the newspaper said.

EADS declined to comment.

Two sources familiar with the discussions said a deal could be reached by Monday, paving the way for an eventual exit by industrial shareholders Daimler (DAIGn.DE) and Lagardere (LAGA.PA).

A source in Germany said a share buyback by EADS was also possible to reduce the share overhang.

Talks would continue until the "last minute" on Sunday, the source said.

Reuters reported on Friday that France and Germany were close to a deal to shake up EADS after France agreed to hive off part of its 15 percent stake to preserve parity with Germany inside a core government shareholder group.

Under this arrangement, France is expected to place 3 percent in a non-voting structure in the Netherlands, where EADS is registered, while keeping economic control of the stock.

A potential mismatch of shareholdings had been a key stumbling block in the talks.

EADS' structure has been an urgent political issue since last month's failure of $45 billion merger talks with UK arms firm BAE Systems (BAES.L) exposed the fragility of existing arrangements.

EADS is due to hold an investor meeting on Monday at which the outlines of the company's new structure could be presented.

(Reporting by Alexandra Hudson, Alexander Huebner in Berlin; Emmanuel Jarry in Paris; Editing by Dale Hudson)