May 20 (Bloomberg) -- European Aeronautic, Defence & Space Co., the parent of planemaker Airbus SAS, is seeking acquisitions in the U.S. to increase its presence in the world's largest military market, its chief executive said.

``We think it's a good time to buy, both because of our strong cash position and because of the dollar's valuation,'' EADS Chief Executive Officer Louis Gallois said today at a briefing with journalists in Paris.

EADS had 8.3 billion euros ($13 billion) in cash at the end of the first quarter, he said, and with the dollar trading at about $1.56 to the euro, the company has a good opportunity to seek U.S. assets. Gallois said EADS is looking particularly in the area of services, defense and security. EADS has a ``target list'' that had included DRS Technologies Inc., a company being purchased by Italy's Finmeccanica SpA.

Gallois said EADS has no specific dollar threshold for an acquisition. The company expected to spend less than the $4 billion Finmeccanica is paying for Parsippany, New Jersey- based DRS and won't make a competing bid, he added.

EADS declined 73 cents, or 4.3 percent, to 16.18 euros in Paris trading after UBS AG downgraded the stock to ``sell'' from ``neutral.'' The Paris- and Munich-based company's shares have dropped 26 percent this year, compared with a decline of 0.5 percent at Chicago-based Boeing Co., the primary competitor to Airbus.

UBS Doubts

``We believe the news flow from the airline industry, aircraft financiers, the Power8 cost-reduction program and program execution will continue to deteriorate,'' London-based UBS analysts including Colin Crook wrote in a note dated today.

Airbus, the world's largest planemaker, reported losses in 2006 and 2007 because of production delays on aircraft including the double-decker A380. The company is part-way through a reorganization called Power8 that aims to cut 5 billion euros from cash spending before 2010 and 2.1 billion euros from annual costs after that. The plan includes 10,000 job cuts.

UBS cut its price estimate on the stock by 22 percent to 14.50 euros.

EADS is abolishing stock options as a means of rewarding executives and will replace them with ``virtual shares'' whose conversion is automatic, Gallois confirmed today. This gives employees no choice about when to extract cash from the shares, reducing the threat of insider trading, he said.

Trading Allegations

The change, announced by Gallois in October, comes as some EADS senior executives face allegations by French regulators and prosecutors of insider trading because they exercised stock options in 2005 and 2006 several months before Airbus disclosed delays on the A380.

Gallois said the investigation will go on ``for years.'' If French regulators assign blame, he said, any accused managers will appeal. Gallois repeated that he maintains the presumption of innocence.

Gallois didn't sell shares and isn't implicated. He became sole chief executive of EADS in August and was co-CEO and head of Airbus from October 2006 until then.

To contact the reporter on this story: Andrea Rothman in Toulouse, France at aerothman@bloomberg.net.

Last Updated: May 20, 2008 12:19 EDT