Aerospace group EADS weakens state control

EADS shareholders approved sweeping reforms on Wednesday that weaken the influence of European governments and allow the aerospace giant to pursue its global ambitions unfettered. The extraordinary meeting in Amsterdam overwhelmingly adopted 15 proposed amendments in a major easing of state clout in the powerful group that also controls Airbus. They notably dissolved a complicated shareholders pact that gave EADS's three founding states -- France, Germany and Spain -- veto rights on strategic decisions and rights to nominate board members. Germany in October used the right to block a plan to merge EADS, which is registered in the Netherlands, with British defence company BAE Systems in a move that would have created a global defence and aerospace giant to rival US company Boeing. The amendments also allow two historic shareholders, German automaker Daimler and the French conglomerate Lagardere, to sell their stakes, with the volume of EADS shares that trade freely rising above 70 percent from below 50 percent in December. The German and French companies have long sought to leave EADS to focus on their core activities, respectively cars and media. In the new ownership pact, national governments remain important shareholders, but their ability to influence company strategy decisions is more limited. In the scheme, Germany is to takeover the 12 percent stake in EADS from Daimler, and France is to cut its holding to 12 percent, with Spain at 4.0 percent. EADS activities involved in national security, such as those participating in France's nuclear deterrent, have been transferred to dedicated subsidiaries whose directors are chosen with each state's approval. An expanded board of directors of 12 people from six countries can now decide without interference from states on "acquisitions, alliances and mergers," executive director Tom Enders said. "No government will have a veto right any longer," he added. The board will consist of four members from France, four from Germany, one from Spain, one from Britain, one from India and, for the first time, an American. EADS is "a much more normal company than we were before," Enders said. Governments, that had the option to increase their stakes in EADS, "fully understood that this would have been a very negative development for a company that needs to internationalise and to grow globally," Enders said. States will nevertheless continue to have influence, Enders said, and the company will hesitate to make strategic decisions against the will of a government. EADS already generates 60 percent of sales outside of Europe, rising to 80 percent if only civil activities are taken into account. In order to mitigate the exit by Lagardere and Daimler, "the board received authorisation from shareholders to plan a repurchase of up to 15 percent of EADS's outstanding share capital at a maximum price of 50 euros per share," Enders said. EADS makes a wide range of products from helicopters and planes to rocket launchers, satellites and security systems. The changes are to occur on April 2 at the latest, EADS said, once they have been registered with the Dutch authorities. Lagardere head Arnaud Lagardere expects to make a capital gain of around 2.0 billion euros ($2.6 billion) through the sale of his company's 7.5 percent holding in EADS, he said in an interview published Wednesday by the French financial daily Les Echos. EADS unveiled better-than-expected 2012 results in February driven by record deliveries of its Airbus aircraft, but cautioned growth could tail off in the current year.