German carmarker Daimler has netted 1.66 billion euros ($2.2 billion) from selling a 7.5 percent stake in EADS , as part of a shake-up at the aerospace group that will put most of its shares beyond state control.
EADS shares were up 7.5 percent at 5:25 a.m. EDT on Thursday as investors welcomed Wednesday's deal for France and Germany to limit their influence in the parent of planemaker Airbus, as well as news EADS will buy back up to 15 percent of its stock.
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Two months ago, EADS was thrown into turmoil after Germany vetoed its plans to merge with BAE Systems in what would have been the world's biggest aerospace and defense deal.
The pact between France and Germany on Wednesday paved the way for Daimler to sell its investment in EADS, allowing it to focus on its core business at a time when it has become a distant third in the global luxury car market.
"The 15 percent buyback announced for 2013 is good news at multiple levels. Firstly it mops up all of the Daimler and Lagardere placement due in 2013," Deutsche Bank wrote in a research note, referring to shares that will also be sold by French company Lagardere. Daimler and Lagardere were widely viewed as proxies for state influence in EADS.
"Secondly it sends a positive message about EADS' free cash flow potential mid and longer term, with management willing to deploy a meaningful 3.3-3.7 billion euros of cash on the buyback. Thirdly it should help alleviate some of the M&A concerns," it added.
In a placement that was several times oversubscribed, Daimler sold 61.1 million shares in EADS for 27.23 euros each, Wednesday's closing price and the top end of the expected range.
Nevertheless this represents an 8 percent discount versus the level EADS traded at prior to news on September 12 of the planned merger with BAE.
"We will invest the proceeds of the sale into the global growth of our divisions, our products and the extension of our technological leadership," Daimler finance chief Bodo Uebber said in a statement on Thursday, confirming the company would not return the cash to shareholders.
The maker of Mercedes-Benz cars is struggling to turn around its fortunes, announcing plans to cut costs by 2 billion euros after it warned in October it would miss its earnings forecast this year and shelved its 2013 margin targets.
Rivals BMW and Audi have left Mercedes in their tracks thanks to rapid growth in car sales in China, where Daimler is seeing tepid demand.
Daimler said on Wednesday it aimed to reduce its remaining 7.5 percent stake in EADS, but would not sell any more shares for a period of six months.
Daimler shares were up 1 percent at 5:25 a.m. EDT.
(Reporting by Christiaan Hetzner; Editing by Mark Potter)