Monday, 27 February 2017
Last updated 2 days ago
Sep 17 2013 | 10:22am ET
The Children's Investment Fund has a plan for the European Aeronautic, Defence and Space Co.'s stake in a French aviation company: give it away.
TCI last month urged EADS, the parent of Airbus, to rid itself of its 46% stake in Dassault Aviation, which offers "no synergies" and "little strategic value." Now, the activist hedge fund says it should distribute its stake to EADS shareholders as a dividend, rather than selling it at an "unattractive price."
Less than 4% of Dassault shares are publicly traded, and a distribution of shares would force more coverage of the stock, TCI said.
"Once the distribution is completed, analyst coverage of the company would increase and the higher liquidity of the shares would make them more investible," TCI wrote to EADS.
EADS holds the Dassault stake under a warehousing agreement with the French government, which owned one of EADS' predecessor companies. EADS may require French government approval to dispose of the Dassault stake, and France has right of first refusal to buy it.