Russians set sights on clout at EADS
Purchase of 5% seen as mere starting point
CHRISTIAN LOWE AND DOUGLAS BUSVINE
Reuters News Agency
MOSCOW -- Russia signalled its intent yesterday to become a major player in European aerospace giant EADS NV, sending the company's battered stock as much as 7 per cent higher.
In the first official comment by the Kremlin since state-owned OAO Vneshtorgbank amassed a 5-per-cent stake in EADS, a senior adviser to President Vladimir Putin said Russia would consider increasing its stake to a blocking minority. But, Sergei Prikhodko told a news briefing, such a move may be some way off and would depend on creation of an industrial partnership with EADS, which controls civilian aircraft maker Airbus SAS and builds the Eurofighter combat jet.
It was not immediately clear what size would represent a blocking stake, which gives a shareholder the right to veto key strategic decisions. Under Russian law it would be 25 per cent plus one share, but in the Netherlands, where EADS is registered, draft legislation would put the threshold at 30 per cent.
However, under a shareholder agreement between EADS's core owners -- Germany's DaimlerChrysler AG, the French state and Lagardère Groupe SCA -- its industrial partners have control over key appointments and strategy.
Yesterday's Kommersant daily quoted unnamed sources as saying Mr. Putin would push for representation on the EADS board when he meets French President Jacques Chirac and German Chancellor Angela Merkel in France later this month. Mr. Prikhodko said Russia would pursue deeper co-operation with EADS if it made economic sense and was in the interests of Russia's aviation industry.
"The question is whether our partners are ready for this sort of deep partnership, whether they will invite us to co-operate in this way," he told reporters.
No comment was immediately available from EADS. Earlier, a spokesman said EADS saw no need to take mutual equity stakes to cement its relationship with Russia.
EADS shares, which have been pummelled in recent weeks in response to a boardroom shakeup and delays on its A380 superjumbo project, closed up 5.4 per cent yesterday at €23.68 ($33.66).
Vneshtorgbank has called its stake a financial investment, but analysts say Russia's No. 2 bank is certain to be acting under Kremlin orders to build a strategic position, possibly for the state's newly created United Aircraft Co.
"Russia has already taken a 5-per-cent stake in EADS and there is nothing preventing Russia increasing its holding by buying shares in the market," said one share trader.
Analysts also say the Vneshtorgbank stake would likely end up in the hands of United Aircraft, a merger of state manufacturers including MiG, Sukhoi, Tupolev and Ilyushin.
MiG general director Alexei Fyodorov, designated head of UAC, said last week that UAC would like to buy up to 10 per cent of EADS, but added that the cost would be too high for now. An equity partnership with EADS could create a springboard for deeper co-operation in building passenger planes -- especially now that Britain's BAE Systems has announced plans to pull out of Airbus, analysts say.
Russia could contribute production capacity and design expertise and, in return for winning a board seat at EADS, may be prepared to open its market by reducing steep import tariffs on aircraft, said defence analyst Pavel Felgenhauer.
Who owns EADS?
DaimlerChrysler Aerospace AG (Germany) 22.5%
France 15%
Lagardère SCA (France) 7.6%
Sociedad Estatal de Participacion Industriales (Spain) 5.5%
Caisse des Dépôts (France) 2.3%
SOURCE: BLOOMBERG
Russia's new industrial air power
Russia's aircraft industry is going through a thorough restructuring, with a new entity called United Aircraft Co. taking over the country's leading manufacturers. United will be headed by Alexei Federov, who ran MiG prior to the merger. Mr. Federov last week expressed interest in acquiring a stake in EADS and analysts say they believe Vneshtorgbank's recent acquisition of 5 per cent was made for United and the Kremlin.
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