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No direct German stake in EADS planned : source

Written by: Staff
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BERLIN, Nov 23 (Reuters) Germany does not expect to take a direct stake in aerospace group EADS via state bank KfW or other federal or state institutions, a senior government official told Reuters on Thursday.

Germany has been thinking about ways to safeguard its influence in EADS should core shareholder DaimlerChrysler cut its 22.5 percent holding by 7.5 percent as Daimler has said it wants to do.

Chancellor Angela Merkel has said Berlin wants to keep German-French parity in the group. Her government is concerned that a reduction of DaimlerChrysler's stake could diminish German influence at a time when Airbus is about to push through substantial cost cuts.

Under a model being discussed by the government, DaimlerChrysler would retain its current voting rights. Details of the plan have yet to be fully agreed.

''Taking a direct stake in EADS via KfW or similar institutions is not envisioned,'' the official said, requesting anonymity because of the sensitivity of the matter.

One option that has been discussed in German media is that Daimler unit Dasa AG would issue a convertible bond tied to the 7.5 percent stake, which could be bought by a consortium of investors. This would enable the government as one of the investors to buy into EADS while avoiding the appearance of taking a direct stake.

CONTRADICTION Without disclosing details, German government spokesman Ulrich Wilhelm confirmed on Wednesday that a basic agreement on what to do about EADS had been reached several days earlier.

The comments by the unidentified German official on Thursday contradicted other comment on Wednesday from a separate official from the city-state of Hamburg, where the Airbus plane-making unit of EADS has a large plant.

The Hamburg official had said 51 percent of the stake in EADS that Daimler wants to unload would be taken over by a group of German states and the federal government, while the other 49 percent would go to a consortium of banks.

Ever since EADS was created in 2000, the company has maintained a delicate balance between German and French influence in its shareholder structure and management.

Delays in the Airbus A380 superjumbo have forced EADS to examine changes to the way it produces large commercial jets.

Berlin fears this could lead to substantial job cuts in Germany.

Separately on Thursday, a source told Reuters that Manfred Bischoff, the German co-chairman of EADS, would give up his post at the firm next year if he becomes the chairman of Daimler as expected.

In France, a judicial source said the public prosecutor's office had begun a preliminary investigation into alleged insider trading in EADS shares.

REUTERS PV HT1939

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