A Dubai-managed fund bought a 3.12 percent stake in Airbus parent EADS, betting on the success of a recovery plan for the world's largest planemaker after years of delay and management feuds.
Dubai International Capital (DIC) did not say how much it paid for the stake through its Global Strategic Equities Fund, which has raised $2 billion to make long-term investments in global companies, especially those with underperforming stock.
The stake would be worth around 614 million euros ($835.7 million) at Wednesday's closing share price and make the fund EADS' fifth largest shareholder. EADS shares, which have fallen around 8 percent this year, were down 0.21 percent at 24 euros at 1450 GMT, having risen more than 2 percent earlier. The government of Dubai owns Dubai International Capital as well as airline Emirates, the largest customer of Airbus's A380 superjumbo.
DIC said neither it nor the fund would seek a seat on the board of EADS, whose profits slumped 94 percent last year on the back of a weak dollar and industrial problems at Airbus.
"We are confident that EADS's superior product offering, comprehensive restructuring programme and committed management represent a strong fit with the fund's investment strategy," DIC said in a statement. The fund supported the EADS restructuring plan to revive Airbus, the group's largest unit, it said.
Airbus said in February it would cut 10,000 jobs and sell up to six factories after a two-year delay in delivering the A380, which will be the world's largest commercial passenger aircraft.
EADS strategy chief Jean-Paul Gut quit last month in a dispute with the company's top officials, triggering the latest management shake-up. Two chief executives resigned in three months last year. Airbus has also been hit by the market success of rival Boeing's mid-sized 787 Dreamliner. Airbus's mid-size equivalent, the A350, had to be redesigned and is due five years behind the Dreamliner in 2013.
Emirates President Tim Clark said last month the A350 was closing in on the Dreamliner and that his airline would decide on an order worth as much as $20 billion for mid-sized planes by October. "I don't think they will get any preferential treatment from EADS," said one London-based aerospace analyst. "But perhaps they (DIC) are taking a longer-term view and see this as leverage to attract EADS and Airbus (work) to the UAE."
Airbus lost its sales lead to Boeing in 2006 and sold less than half as many planes as the US manufacturer in the first five months of the year before announcing 425 firm orders worth $61 billion at the Paris air show last month.
DIC believes the value of EADS's other commercial assets are underestimated, it said, citing EADS's businesses such as helicopter supplier Eurocopter and aerospace company EADS Astrium and a stake in the Eurofighter consortium.
EADS is the fund's second purchase after a stake in HSBC Holdings Plc in May. EADS, which has dual headquarters in Munich and Paris, was created in 2000 through a government-sanctioned merger of German and French aerospace firms and the company's fate remains a political issue.
The German government, which does not hold a direct stake in EADS but views the company as an important asset, is considering new measures to protect key domestic firms from state-controlled investment funds in Russia, China and the Middle East.
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