France, Germany To Cap Foreign Stakes In EADS - Report

March 7, 2008

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France and Germany are finalizing changes to EADS' corporate by-laws to prevent foreigners from building large stakes in Europe's flagship aerospace and defence company, the Financial Times reported on Friday.

Dubai's sovereign wealth fund bought 3.1 percent of EADS last summer and VEB, a state-controlled Russian bank, took a 5 percent stake in December.

But the French government, French media group Lagardere and German carmaker Daimler, which jointly control 45 percent of EADS, are planning to prevent any investor considered predatory from owning more than 15 percent, the FT said citing people close to the talks.

The move comes after the Franco-German group late last week won part of a USD$35 billion deal to supply the US military with its Airbus tanker aircraft, defeating rival Boeing.

Some US politicians have said giving the contract to a foreign company could have dire security implications and such concerns could intensify if EADS' Russian or Middle Eastern shareholders were to increase their holdings, the FT said.