Valuation fears cloud EADS shake-up

EADS co-chief executive Noel Forgeard quit on Sunday after losing a bitter struggle to keep his post at Europe8217;s aerospace giant, and the man who had replaced him as the head of Airbus a year ago, Gustav Humbert, resigned in Forgeard8217;s wake. EADS appointed French railways chief and aeronautics expert Louis Gallois to replace Forgeard and an industry outsider, the former number two at glassmaker Saint-Gobain, Christian Streiff, to shore up the industrial processes at Toulouse-based Airbus.

Analysts welcomed the boardroom shake-up but also expressed concerns over a lower-than-expected valuation on Airbus implied by a separate weekend announcement on the terms under which BAE Systems could sell its 20 per cent Airbus stake to EADS.

A report by investment bank Rothschild valued BAE8217;s stake at 2.75 billion euros 3.5 billion. EADS plans to pay for the stake in cash.

CM-CIC Securities raised its rating on EADS to 8216;8216;accumulate8217;8217; from 8216;8216;reduce,8217;8217; saying the boardroom changes removed some uncertainty over the stock.

However, several others focused on Airbus8217;s lower-than-expected valuation, which also sent shares in BAE Systems down more than 6 per cent at one stage.

8211;Tim Hepher 038; Benoit Van Overstraeten