Accelerated efforts by Germany and France to rearrange stakes in EADS knocked shares in the Airbus parent last week as investors fretted about surplus stock and state interference.
In the latest twist to rapidly unfolding events since merger talks with BAE Systems collapsed last month, German newspaper Handelsblatt reported France could sell 3 percent of EADS to Germany to help bring Berlin on board as a shareholder.
That would force car maker Daimler, which represents German interests in Europe's largest aerospace group, to sell 3 percent of EADS on the market to keep the Franco-German balance intact while further changes are drawn up.
Shares in EADS fell 1.4 percent.
"The maneuvering of the government shareholders, and the overhang of a potentially significant secondary sale are no doubt weighing on investor sentiment," RBC Capital Markets analyst Rob Stallard said in a note.
The ownership structure of Europe's largest aerospace group has been in the spotlight since the planned merger with BAE drew a veto from Germany and sped up efforts by Berlin to play a more direct role in EADS, matching France.
French President Francois Hollande confirmed France and Germany had discussed the issue on the sidelines of a European Union summit in Brussels on Friday, as reported earlier.
"We will need to review our respective shareholdings and redefine the shareholder pact, and all that will happen in the next few weeks," Hollande told a news conference.
EADS is jointly controlled by French and German interests representing 45 percent of the votes contained in a shareholder pact. Spain owns 5.5 percent but is not in the main pact.
Unlike in France, where the government owns 15 percent in partnership with media firm Lagardere at 7.5 percent, Germany exercises its interests solely through car firm Daimler, which owns or controls 22.5 percent of the aerospace group.
Lagardere and Daimler both want to reduce their stakes.
The German government has evolved in the past year from being an unwilling purchaser of last resort for Daimler's shares to being an ardent potential buyer in order to safeguard its interests in EADS, according to people familiar with the talks.
Germany has indicated it wants to match France's government stake in EADS. But the two sides can only own 12 percent each to avoid triggering a mandatory bid under takeover law in the Netherlands, where EADS is registered.
Germany would top up its 12 percent stake by acquiring 7.5 percent from a bank consortium managed by Daimler and 1.5 percent from Daimler itself, Handelsblatt reported.
EADS declined to comment.
Ultimately, according to people familiar with the discussions, Lagardere and Daimler would be free to exit completely, leaving France and Germany with 12 percent each and Spain at 5.5 percent - collectively just below the 30 percent threshold for a mandatory bid under Dutch takeover law.
Although the industrial partners that set up EADS in 2000 have long been looking towards the exit to focus on core businesses, the maneuvering increasingly worries investors.
The moves overshadowed a blockbuster sale of 60 Airbus A320 jets to China Eastern worth USD$5 billion, the company's first major deal with China since the European Union agreed to freeze an airline emissions scheme opposed by Beijing.
"Fundamentally, the outlook for the company is completely detached from these government moves. But coming fresh on the heels of the BAE talks, it has again reminded investors that EADS is not a standard, independent company," Stallard said.
Germany's strengthened shareholder position has triggered speculation that it would allow the BAE deal to be revived. But most officials have said the deal was blocked out of a complex brew of political concerns that mainly remain.
"We doubt this is a curtain raiser to a revival of the BAE deal," said Agency Partners analyst Nick Cunningham.
Ratings agency Fitch warned the new arrangements would do little to ease concerns over corporate governance at Boeing's European rival, especially in the eyes of potential buyers of defense equipment like the United States.
"The changes will not alter the perception that EADS is a state-controlled corporation, which restricts its chances of winning large export defense contracts, but they would bolster the finances of major shareholder Daimler."