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EADS: The Boardroom Battle at Europe's Aerospace Giant



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Code : GOV0020

Year :
2005

Industry : Aircrafts and Ship Building

Region : Europe

Teaching Note: Not Available

Structured Assignment : Not Available

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Excerpts

EADS: A Profile With the disintegration of theUSSR in 1989 and the end of theColdWar, global defense spendingwitnessed a sudden decline. This spurred consolidation in the global defense industry, especially in the US through partnerships, mergers, acquisitions and alliances. However, till the late 1990s, Europe did notmakemuch headway in consolidation of its defense industry, due to multi-national politics between the European nations and industry bickering asmajor players across the continent were backed by respective governments...

Ownership Structure at EADS The ownership of EADS [Exhibit – 1] lay in a complex arrangement to balance the French, German and Spanish interests in the company. The French ownership arrangementwas through the State holding company Société deGestion de Participations Aéronautiques (SOGEPA),30 private Lagardere group and Financial Institutions BNP Paribas31 and Axa,32 together holding and controlling 30%of the shares in EADS. The German interests were through DiamlerChrysler’s holding and controlling 30%of shares while the Spanish State controlling 5.48%of shares through its holding company Sociedad Estatal de Participaciones Industriales (SEPI).33 In the rest of the shareholding, 30.65%lay with the Public,34 French State (directly) and DaimlerCrysler (directly) hold 1.14%and 2.73%respectively.

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Boardroom Battle at EADS InDecember 2001, The Economist observed, “….there is concern atEADS’s twin head offices inParis andMunich that the company’s oddmanagement structure could leave it vulnerable in a crisis. Aswell as two head offices, the company has two chairmen and two chief executives, one German and one French. On top of the cross-border tensions that such a set-up inevitably creates, there is also friction between the bosses of Airbus and EADS, given that Airbus dominates the business, but is technically EADS’s corporate daughter.” The crisis in 2005 could be traced back to the relationship between Forgeard and Late Jean-Luc Lagardère. Forgeard joinedMatra as Senior VicePresident of Defence and Space activities in 1987. In 1992, hewas appointed as theManaging Director of Lagardere and CEO ofMatra Hautes Technologies.



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