Daimler AG (FRA:DAI) has bowed out of its aerospace activities by selling its 7.5 percent stake in European aerospace company EADS NV (EPA:EAD) for about €37 per share, or about €2.2 billion ($2.9 billion).
The move means the German maker of Mercedes-Benz and Smart cars is bowing out of aerospace operations after 13 years with the Netherlands-based maker of Airbus and military aircraft.
“The proceeds from this sale are contributing positively to our free cash flow this year and in addition to the earnings from our ongoing businesses, will also support our policy of stable dividends,” Daimler management board member, Bodo Uebber, said.
The proceeds from the sale eases concerns over the company’s ability to handle the next dividends payout, estimated to be about €2.3 billion, or €2.20 per share, according to Reuters. The dividends will be paid after the company’s annual general meeting this month.
EADS bought back 16 million shares, or about €600 million worth of the total sale. The company said interest from institutional investors was strong. Daimler entered into cash-settled agreements with Goldman Sachs Group Inc. (NYSE:GS) and Morgan Stanley (NYSE:MS), which gain control over eight million shares of the aerospace giant.