German Chancellor Angela Merkel

Germany seeks local investor for EADS stake

Germany is looking for domestic private investors to buy part of Daimler's stake in EADS, government sources said.

The ruling coalition wants to keep German influence at the European aerospace group and that a systematic search would get underway in the coming weeks, sources said.

"The starting shot has been fired," one source said.

The sources added that the priority for Chancellor Angela Merkel's conservative government, is to find one or more domestic investor - either industrial or financial - for a 7.5 per cent stake and to retain German leverage at Airbus maker EADS, a major employer in Germany.

Daimler, which owns 15 per cent of EADS and has voting rights for a further 7.5 per cent of its shares held by a consortium of financial investors, has made clear it wanted to reduce its stake as it no longer views aerospace as part of its core business.

The French government and French media group Lagardere together hold 22.5 per cent of the aerospace group.

The German government aims to clear up the matter by the end of the year, the sources said, though it would not be a problem if it took longer.

The fragile power balance at EADS, which competes with Boeing in the global aerospace sector, has been politically sensitive ever since the group was created in 2000.

Spanish state holding company SEPI holds 5.5 per cent of the firm and the remainder of the stock is free floating.

German sources said previous efforts to find a buyer had shown there was only a very limited number of industrial or financial groups who were seriously interested in the stake.

If no buyer is found, one possibility may be to sell the shares to state bank KfW, but some senior members of the Free Democrats (FDP), Germany's junior coalition partner, oppose this idea as they want to avoid any possible injection of federal money to EADS.

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