VIPsight - October 2012

COMPANIES

Hurdles for armaments merger getting bigger

For  European Aeronautic Defence and Space Company (EADS) and BAE Systems, it is becoming increasingly difficult to implement their proposed merger. By 10 October the Franco-German aerospace group must announce whether it will go with its British competitors or not. The different interests of the governments of Germany, France and Britain could derail the merger. A particular issue is the participation rights of the States. François Hollande now apparently wants to set up a blocking stake in the new company along with the German government. The British are against this, and whether Germany will follow the French President’s idea is still open. The project of the Airbus parent company and the UK defence group also meets concerns from the two major industrial EADS shareholders, Lagardère and Daimler. Lagardère announced on 1 October in Paris that the merger terms were not satisfactory at the moment. The company called on EADS CEO Thomas Enders to rework them and take the interests of French shareholders into account more in the project. Daimler criticized the decline in share value since the announcement of the merger plans.

DAX entrants Continental and LANXESS replace MAN and METRO

Continental and LANXESS have since 24 September replaced MAN and METRO in the DAX; for around 25 years these shares had been a fixed part of the major league on the exchange. It is the first change in the German first league since 2010 and only the third time in its roughly 25-year history that two companies go down at the same time other than through acquisition or merger. For the automotive supplier it is the second revival. For the retail group, most likely the well below average share price this year was fatal. At the vehicle manufacturer, the free float had dropped so much after the acquisitions by the Volkswagen Group that it was not enough to remain in the DAX. In the MDAX TAG Immobilien displaced  the engine manufacturer Deutz, and in the TecDAX BB Biotech and LPKF Laser & Electronics succeeded Gigaset and Singulus. The basis for the decisions by the working group were the stock-exchange index rankings, in which the companies are sorted by trading volume and free-float-adjusted market capitalization.