Dubai International buys 3.12% stake in EADS

The Dubai government's investment fund, Dubai International Capital, on Thursday became one of the largest shareholders in Airbus parent EADS, buying a 3.12% stake in the European aerospace and defense giant.
DIC, which bought the stake through its $2 billion Global Strategic Equities Fund, didn't disclose how much it paid, but said the investment is supported by "key limited partners."
It added that it won't seek a seat on the board or an active role in management, but stressed it aims to build a "strategic relationship" with EADS management and shareholders.

EADS in a statement said it welcomes the Dubai investment and sees DIC was a "usual institutional investor."
At current market prices, a 3.12% stake in the company would be worth about 614 million euros ($837 million).
Dubai is already one of the biggest buyers of Airbus planes. The government-owned Emirates Airlines is the largest customers of the A380.
EADS (FR:005730: news, chart, profile) shares rose 0.9% in Paris afternoon trading.
EADS had been on shortlist since beginning
DIC Chief Executive Sameer Al Ansari said the EADS investment would bring the fund closer to reaching its $10 billion global investment target.
"EADS has been on our shortlist from the outset," he said.

While he acknowledged that the company has run into industrial and financial problems in the past year because of delays to Airbus's A380 superjumbo jet program, it said DIC feels confident that Airbus' "superior product offering, comprehensive restructuring program and committed management" are a strong fit with the fund's investment strategy.
"Whilst we believe that the value of EADS' other commercial assets are under-estimated, we are supportive of EADS' management's announced steps to regain investor confidence by delivering the envisaged recovery plan at its Airbus subsidiary," he said.

Although Airbus has struggled in the past year, it put in a star performance at the Paris Air Show last month, taking in a total 415 firm orders from 19 customers. Rival Boeing (BA :
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EADS, which saw its share price tumble more than 40% last summer, has recently become more vulnerable to foreign investment.
The French state and Lagardere (FR:013021: news, chart, profile) together hold a combined 22.5% stake in EADS, while DaimlerChrysler (DE:710000: news, chart, profile) (DCX :
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DCX92.81, -0.64, -0.7% ) owns 15% of the shares but controls 22.5% of the voting rights, creating a perfect balance between French and German interests inside the group.

But in September Russia's OAO Bank VTB announced it had built a 5% share in the company. Societe Generale analysts said at the time that there was no limit to any group building a stake in EADS.
And EADS' financial woes aren't likely to end soon. It slipped into the red in the first quarter and has already warned investors that Airbus would post a "substantial loss" in 2007. Airbus is in the midst of an extensive restructuring program, dubbed Power8, which will see it cut 10,000 jobs over four years and sell at least six of its plants to "strategic partners."

EADS has already been in the news this week, with a report in the International Herald Tribune that French President Nicolas Sarkozy is pushing to secure an agreement to streamline the company's management structure. EADS has a French and a German CEO to maintain the balance of power inside the group.

According to the report, which didn't name sources, Sarkozy is trying to convince the Germans to abandon the dual French-German management in favor of a single chief executive and a single chairman. He was reported to be pushing for French co-CEO Louis Gallois to stay in the job while German co-CEO Tom Enders would be asked to step down. The chairman post would then go to the Germans.

source:www.marketwatch.com