Daimler close to deal to sell part of EADS stake

Frankfurt, Dec 15: Carmaker DaimlerChrysler AG is close to a deal to sell part of its stake in European aerospace firm EADS, a financial source with knowledge of the situation told Reuters.

''There's basically no doubt that an agreement will be reached,'' the source said.

Earlier, Germany business daily Handelsblatt reported that a deal for Daimler to sell 7.5 percent of EADS to a group of banks and other investors, reducing its stake to 15 percent, could be finalized before Christmas.

But the source told Reuters: ''A decision will be made by DaimlerChrysler and the investors only in January.'' The deal is a delicate one because it could reduce German influence in EADS at a time when its struggling Airbus unit is preparing to start a substantial cost-cutting program, upsetting the Franco-German power balance in the aerospace group and making Germany a softer target for the cuts.

Handelsblatt said the banks and the German government had agreed on a mechanism whereby the 7.5 percent in EADS Daimler wants to sell would effectively be converted into preference shares without voting rights for a period of about four years.

Daimler would thereby keep all voting rights during this time, the newspaper said it had found out from the banks.

EADS never comments on its shareholder structure, and Daimler has consistently declined to discuss any timetable for the planned stake sale.

Last month, Daimler Chief Executive Dieter Zetsche told Reuters the carmaker was close to an agreement with the German government on the issue.

Reuters