Airbus Group NV gained Jana Partners LLC, the $7 billion hedge fund run by Barry Rosenstein, as an investor, which cited the manufacturer’s attractive prospects with products including the A350 wide-body aircraft.
Airbus is “the superior opportunity within aerospace,” New York-based Jana said in a letter to investors. Progress on Airbus’s newest plane, the A350, as well as less government influence and a large cash pile make it a compelling opportunity, said the fund that generally invests in companies undergoing shifts. It didn’t disclose the size of its stake.
Airbus Chief Executive Officer Tom Enders is restructuring the maker of A380 super-jumbos and Tiger attack helicopters by focusing on commercial aerospace and cutting jobs in the defense subsidiary, where growth prospects are weaker. The company booked a record 1,619 gross commercial jet orders last year and delivered 626 planes, sending its stock up 89 percent.
Jana invested in Boeing Co. a year earlier, betting that battery issues surrounding the 787 Dreamliner model would provide a good opportunity for a rebound in the stock price.
“When we compare Airbus today to Boeing at the time of our initial investment, Airbus has a bigger backlog, less exposure to the defense end market, greater balance sheet cash per share,” Jana said.
Valued at the same level as Boeing, Airbus’s share’s should trade at 95 euros, the fund said. The stock traded at 53.3 euros as of 4:33 p.m. in Paris, valuing the Toulouse-based company at 41.7 billion euros ($57 billion).
The Children’s Investment Fund Management LLP, or TCI, in on Aug. 2 wrote a letter to Enders urging him to sell the company’s holding in Dassault Aviation SA, maker of the Rafale combat jet, because the stake is a poor investment. EADS holds a 46 percent non-voting stake that TCI said may be valued at 5 billion euros.
Enders pushed through a restructuring of the company’s governance in part to appeal more to outside investors that were scared off by government meddling in management decisions. France and Germany agreed to relinquish influence in Dec. 2012, months after an attempted merger between Airbus and BAE Systems Plc fell through because of political opposition.
Airbus’s share evolution faces risks, Jana said. However, with 10 euros per share in risk reserve held for the A350, a smooth development of the plane being handed over to customers from this year “will grossly exceed necessary cash.”