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EADS rejects Russian demand for seat on board

EADS, the Franco-German aerospace and defence giant which owns Airbus, yesterday rejected demands from its new Russian shareholder for a seat on the board.

A similar message is due to be conveyed by the French President, Jacques Chirac, to the Russian President, Vladimir Putin, when he makes a state visit to Paris next week.

The state-owned Russian bank Vneshtorgbank bought a stake of a little more than 5 per cent in EADS last week. It followed this up by saying it wanted board representation and was considering increasing its stake so it had a blocking minority in EADS.

However, in a joint statement, EADS's co-chairmen, Manfred Bischoff and Arnaud Lagardère, ruled out the Russian request for a boardroom seat, saying it was not possible under the company's corporate governance arrangements.

"The existing corporate governance rules and structure have proved their efficiency for all shareholders. It would not be in the interest of the company to change corporate governance or enlarge the group of industrial shareholders," the statement said.

EADS is thought to be concerned about the impact on its defence business of the Russians gaining board representation. In particular, it could compromise attempts to win US military contracts, including a $100bn (£53bn) order for air-to-air refuelling tankers.

EADS is controlled by three founding shareholders - the French state, the French media conglomerate Lagardère and the car maker DaimlerChrysler - which between them own 45 per cent of the company. They originally owned 60 per cent of EADS but sold down 15 per cent of their joint shareholdings earlier this year.

The Russian stake-building took EADS by surprise, coming hard on the heels of a profits warning from the company which wiped 25 per cent off its stock market value.

The two EADS chairmen said they welcomed any investment in the company by supportive shareholders and said the company had "great interest" in extending co-operation with the Russian aerospace industry. But they added that EADS had a strictly defined corporate governance structure with clear rules that could not be circumvented to accommodate individual outside shareholders.

The Russian investment comes as EADS prepares to buy out BAE Systems' 20 per cent stake in Airbus for £1.9bn. This week, BAE warned that the delays on the A380 super-jumbo project could be even worse than thought.