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Sunday, July 15, 2007
The runway to success for Airbus goes through Dubai, it seems. Only a few weeks after Dubai-based airline Emirates ordered $2.6 billion worth of planes from the European manufacturer, investment firm Dubai International Capital has bought a 3.1% stake in Airbus' parent, European Aeronautic Defense and Space.
The stake has been valued at 614 million euros ($837 million) and could be a strategic starting point for Dubai International Capital, a subsidiary of government-owned Dubai Holding. Although the $6 billion private-equity firm said it would not seek a board seat nor take "an active role" with European Aeronautic Defense and Space (other-otc: EADSF - news - people ), it added that it wanted "a strategic relationship with the EADS management and shareholders."
"EADS has been on our shortlist from the outset," said Sameer al-Ansari, Dubai International Capital's chief executive. "The company’s challenges are well-publicized."
EADS has run into trouble with its Airbus unit over the past two years, with long-running delivery delays and manufacturing problems with its A380 superjumbo jet leading to the high-profile departure of several executives. (See "Airbus Rues Huge Losses") But the injection of private investment could ease the gridlock that has emerged between the governments of France and Germany over the company's dual-governance structure.
The power balance of EADS' major shareholders is divided between the French government's 15% stake, the Lagardere Group (other-otc: LGDDF - news - people )'s 15% stake that is being reduced to 7.5%, DaimlerChrysler (nyse: DCX - news - people )'s 15% stake and a 7.5% stake owned by a German investor consortium, including some German states. Russia entered the fray last year with a controversial 5% stake held through state-owned Vneshtorgbank.
With France and Germany wishing to retain influence, the arrival of Dubai could be the answer to political prayers. "The EADS and the government reaction will be ecstatic," said Doug McVitie, managing director of Arran Aerospace, adding that the stake represented "money with no overt strings attached." President Nicolas Sarkozy of France said last month that he wanted to attract new investors to EADS but worried that the restrictive shareholder pact that limited voting rights would deter new arrivals.
An EADS spokesman said that the sale was "good news" and that the company "always wanted a shareholder structure that's as broad as possible."
Dubai International Capital has enough spare cash to be looking to build its stake. The firm has been in a shedding mood so far this year: it sold the Tussauds entertainment group to Blackstone (nyse: BX - news - people ) for £1.0 billion ($2.1 billion) in March, and two months later announced the sale of its $1 billion holding in DaimlerChrysler.
Investors cautiously pushed up EADS shares 22 euro cents (44 cents), or 0.9%, to 24.27 euros ($48.97).
The stake has been valued at 614 million euros ($837 million) and could be a strategic starting point for Dubai International Capital, a subsidiary of government-owned Dubai Holding. Although the $6 billion private-equity firm said it would not seek a board seat nor take "an active role" with European Aeronautic Defense and Space (other-otc: EADSF - news - people ), it added that it wanted "a strategic relationship with the EADS management and shareholders."
"EADS has been on our shortlist from the outset," said Sameer al-Ansari, Dubai International Capital's chief executive. "The company’s challenges are well-publicized."
EADS has run into trouble with its Airbus unit over the past two years, with long-running delivery delays and manufacturing problems with its A380 superjumbo jet leading to the high-profile departure of several executives. (See "Airbus Rues Huge Losses") But the injection of private investment could ease the gridlock that has emerged between the governments of France and Germany over the company's dual-governance structure.
The power balance of EADS' major shareholders is divided between the French government's 15% stake, the Lagardere Group (other-otc: LGDDF - news - people )'s 15% stake that is being reduced to 7.5%, DaimlerChrysler (nyse: DCX - news - people )'s 15% stake and a 7.5% stake owned by a German investor consortium, including some German states. Russia entered the fray last year with a controversial 5% stake held through state-owned Vneshtorgbank.
With France and Germany wishing to retain influence, the arrival of Dubai could be the answer to political prayers. "The EADS and the government reaction will be ecstatic," said Doug McVitie, managing director of Arran Aerospace, adding that the stake represented "money with no overt strings attached." President Nicolas Sarkozy of France said last month that he wanted to attract new investors to EADS but worried that the restrictive shareholder pact that limited voting rights would deter new arrivals.
An EADS spokesman said that the sale was "good news" and that the company "always wanted a shareholder structure that's as broad as possible."
Dubai International Capital has enough spare cash to be looking to build its stake. The firm has been in a shedding mood so far this year: it sold the Tussauds entertainment group to Blackstone (nyse: BX - news - people ) for £1.0 billion ($2.1 billion) in March, and two months later announced the sale of its $1 billion holding in DaimlerChrysler.
Investors cautiously pushed up EADS shares 22 euro cents (44 cents), or 0.9%, to 24.27 euros ($48.97).
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