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Thursday, January 18, 2007

German City-State Set to Buy EADS Stake

German Radio | Jan 18, 2007

Bremen has said it is ready to buy part of the stake in European aerospace giant EADS being offloaded by carmaker DaimlerChrysler. The city-state's purchase would help meet aims to keep the shares in German hands.

The Bremen government is prepared to spend 30 million euros ($38.7 million) to acquire part of the European Aeronautics Defense and Space Company (EADS). The northern German city-state would then hold 2 percent of the 7.5 percent stake DaimlerChrysler has put up for sale.

Mayor Jens Böhrnsen and his deputy Thomas Röwekamp agreed on the sum Monday and will make a proposal to the regional government on Tuesday, a spokesman said.

Other German local governments over the weekend hinted that they were also interested in acquiring part of the DaimlerChrysler stake, as part of a bid to keep it in German hands. These include the city state of Hamburg and the northwestern state of Lower Saxony. Both are, like Bremen, home to EADS factories or offices.

Support from Berlin for new shareholder structure

After months of protracted negotiations, German government spokesman Ulrich Wilhelm said in a newspaper interview last week that a solution had been found with regard to EADS' shareholder structure.

Berlin has long feared that France could gain the upper hand in the long-running power struggle at EADS when German-US auto giant DaimlerChrysler cuts its stake from 22.5 percent to 15 percent.

Such concerns gained more urgency from EADS' financial crisis, triggered by problems at aircraft maker Airbus. There has been speculation that France could seek to increase its stake in EADS via a possible capital hike.

Keeping stake in German hands a top priority

Berlin is adamant that the 7.5-percent stake being put up for sale by DaimlerChrysler remain in German hands and must not be allowed to fall under French or even Russian control.

But Moscow is also keen to increase its say in EADS after state-owned bank Vneshtorgbank bought a 5.02 percent stake in September 2006. Spanish interests are represented by the holding group Sepi, which owns 5.48 percent.

DaimlerChrysler effectively represents German interests in the company, while France is represented via a 30 percent stake shared by the state holding company Sogeade and media group Lagardere.

Lagardere has committed itself to cutting its stake to put French interests back on a par with Germany's. But the balance of power would be upset again if DaimlerChrysler were to reduce its stake further.
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