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Airbus raises stakes in move to divest Dassault

Airbus is accelerating its bid to sell off non-core holdings with the placement of a second tranche of shares in Dassault Aviation, taking its stake in the maker of Rafale fighters and Falcon business jets down to about 27%.

The sale – of up to 1.61 million shares, amounting to up to 17.5% of Dassault's share capital for an expected €980 per share – could be sealed as early as Thursday 26 March, when bookbuilding closes. Earlier on 25 March, Airbus had announced that it would sell 1.38 million shares – about 15% of Dassault's share capital – with the subsequent increase understood to have been prompted by strong interest from institutional investors.

The French government has opted not to exercise its right of first refusal. Dassault had said it would buy up to half the earlier offering, up to a value of 5% of its share capital, but has yet to indicate whether it will increase its order from the additional 230,000 shares now for sale.

At the earlier, 1.38 million shares/15% level, the transaction could leave Dassault Aviation parent Groupe Dassault – which also owns the software house Dassault Systemes, and other businesses – with around 56% of the shares. The remaining 17% would be free-floating, and Dassault said it welcomes the increase in this segment.

If Dassault holds to its 5% ceiling and the French government stays on the sidelines, the additional 230,000 shares will push the free float up to nearly 20%.

Should neither Dassault nor the French state participate in further Airbus sell-offs, the free-float in Dassault Aviation shares could rise to as high as 44%. Such an eventuality would leave Groupe Dassault in firm control of its aviation arm.

Airbus had long held more than 46% of Dassault until November 2014, when it sold a tranche back to Dassault. That shareholding, a legacy of a Francois Mitterrand-era French government attempt to nationalise Dassault, had been seen by Airbus management and investors as pointlessly tying up some €4 billion. Although it received a proportional share of Dassault's earnings, Airbus had no control over the company, nor any particular interest in influencing it. Moreover, the two are competitors in military aircraft, with Rafale a rival to the Airbus-BAE Systems-Finmeccanica Eurofighter Typhoon.

The Dassault stake, inherited from Airbus predecessor Aerospatiale, was a legacy of Airbus’s origins as a political project, formally formed from French and German state-owned aerospace interests. But the past couple years have seen Airbus win its freedom from political oversight by Paris and Berlin, which now have small shares of less than 11% each but no say in management.

Chief executive Tom Enders, who drove the reduction of state shareholdings and then, in 2014, completed a divisional restructuring that also ditched the old EADS name – European Aeronautic Defence and Space – in favour of Airbus Group, has been keen to operate as a “normal” company. Beyond its Dassault stake, the group is pushing to sell off non-core businesses, a move which Enders has labelled a priority.

Ultimately, Airbus may conclude its divestment from Dassault this year, through it has agreed a 180-day lock-up for its remaining shares.

The November tranche sale – of 8% of Dassault shares for the same €980/share being offered this time – took Airbus’s stake in Dassault down to 42.11%, following Dassault’s cancellation of some of its treasury shares.

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