Activist Hedge Fund TCI Pushes EADS to Ditch Dassault Stake. TCI hedge fund, has written to the chief executive of EADS to demand it sell one of its most sensitive assets in a direct challenge to the defence company’s management and the French government.
Acitvist hedge fund TCI has told Tom Enders, EADS’ chief executive, that the company should sell immediately its €4bn stake in Dassault Aviation, a strategically important French defence player and the maker of the Rafale fighter jet.
The Children’s Investment Fund Management (UK) LLP (TCI) is a London‐based hedge fund founded by Chris Hohn in 2003 which manages The Children’s Investment Master Fund.
Headed by Chris Copper-Hohn, TCI is one of the best-known activist hedge funds and has a record of rallying other shareholders behind its campaigns to shake up a company’s management.
Following Via FT:
When an activist hedge fund wrote to Tom Enders urging the EADS chief to sell the aerospace group’s big stake in Dassault Aviation, it was essentially tossing a well-aimed grenade at France’s socialist government.
The 46.3 per cent shareholding in Dassault – maker of the Falcon business jet and more importantly the Rafale fighter – is at the centre of an elaborate set of cross-shareholdings and family interests knitting together France’s strategic defence industry.
But, as the TCI hedge fund pointed out, the stake, worth €4bn at today’s market values, represents a poor use of EADS capital. TCI’s criticism in a letter to Mr Enders comes as EADS has decided to concentrate its future development on commercial planes, changing its name to Airbus accordingly.
“They have a point,” says François Heisbourg, special adviser at the Foundation for Strategic Studies in Paris. “The stake is a stack of money frozen into a large minority shareholding that is largely sterile.”
TCI clearly knew that, as far as Mr Enders was concerned, it was pushing on an open door. He has made much of recent changes in EADS’s structure, removing veto rights from its French, German and Spanish state shareholders, that he says now mean the company is under “normal” governance.
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