TCI demands EADS to dispose Dassault Aviation stake

August 5
5:57 AM 2013

The Children's Investment Fund (TCI), the world's biggest activist hedge fund by assets managed, demanded that the European Aeronautic Defence and Space Company (EADS) sell the stake it holds in Dassault Aviation.

TCI wrote to Tom Enders, Chief Executive of EADS, saying that the 46% stake that the latter has in the Rafale fighter jet maker should be disposed. Valued at EUR 4 billion or USD 5.3 billion, TCI said the stake was "a poor use of capital," gave "no synergies," and contained "limited strategic value." TCI has more than 1 percent stake in the share capital of EADS, which planned to be renamed as Airbus. The letter urged EADS to sell their stake in Dassault through a trade sale or a public offering. TCI also suggested that the proceeds be utilized for a share buyback or pay stockholders a special dividend.

Reuters, who saw the letter, however reported that EADS may not have a free hand on the matter. The aviation company has a shareholder agreement with the French government which owns a 12% stake in EADS, Reuters reported.

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