Germany Sells Stake in Frankfurt Airport
October 26, 2005
The German government plans to sell its 18.2-percent stake in Fraport, the operator of Frankfurt airport, officials for Rothschild Bank, who advise Berlin in the matter, said Wednesday.
The move would involve the direct sale of 10.6 million Fraport shares, equivalent to a stake of 11.6 percent, to institutional investors via an accelerated bookbuilding process, Rothschild said in a statement.
At the same time, the government would sell call options on a further six million shares to JPMorgan investment bank.
If all call options were exercised, the federal government would see its holding in Fraport reduced to zero, the statement said.
Filling the budget hole
The German goverment meanwhile plans to use the money from the share sale to help fill the country's 35 billion-euro budget hole, a spokesman for Germany's finance ministry said. Altogether, the government hopes to get 10 billion euros from privatizations for the 2005 budget.
On Wednesday, Peer Steinbrück, who will likely become Germany's next finance minister, is expected to discuss specific spending cuts with Chancellor-designate Angela Merkel and leading politicians of his Social Democratic Party (SPD) and Merkel's Christian Union parties, who want to form a grand coalition government.
A positive move for Fraport
Fraport officials welcomed the move, saying that the sale could help boost the company's share value. Shares initially dropped almost 4 percent after the announcement.
On Monday, Fraport announced that it will spend some 100 million euros to prepare the airport for the new Airbus 380 that's expected to arrive by 2007. More than 51 million passengers use Frankfurt airport, the company's biggest hub, each year.
Officials for the state of Hesse, which holds 31.8 percent of Fraport shares and the city of Frankfurt, which holds 20.3 percent, said they were not planning to follow suit and had agreed to stay put at least until 2010.
Berlin's further sale plans
Berlin, on the other hand, also wants to sell its remaining shares in Deutsche Telekom and Deutsche Post next year after disposing of assets worth about 5 billion euros every year since 2000, Bloomberg news service reported.
Germany also wants to sell its 26 percent stake in Munich airport, a 30.9 percent stake in Cologne-Bonn airport, its holding in Duisburg Hafen as well as the country's air traffic control system, Bloomberg reported.