Aerospatiale Matra

    Lagardère announces the confirmation of its preliminary agreement with the French Government in relation to the strategic partnership between Lagardère and Aerospatiale. This agreement, which is detailed below, remains subject to the approval of the Commission des participations et des transferts.

    In accordance with the Prime Minister’s previous announcement of 22 July 1998, Lagardere and Aerospatiale have developed an industrial plan aimed at regrouping the operations of Aerospatiale and Matra Hautes Technologies with the objective of uniting and reinforcing existing French core competencies in the field of Aeronautics, Aerospace and Defence. This agreement is seen as a first step in the construction of a Europe-wide industry.

    Following satisfactory completion of all stages of this agreement and the effective privatisation of Aerospatiale, Lagardère will receive 33% of Aerospatiale’s share capital in exchange for the transfer of Matra Hautes Technologies business to Aerospatiale and a payment of FFr 850 million to the French Government. The combined entity will be known as Aerospatiale Matra.

    As a result of the shareholder rights provided to Lagardère, the French Government has received guarantees from Lagardère in relation to the evolution of Aerospatiale Matra’s share price relative to the CAC 40. Lagardère could be required to make further payments to the French Government, up to a maximum amount of FFr 1,150 million, as a result of these guarantees.

    According to preliminary calculations, the agreement will enhance Lagardère’s earnings per share in 1999.

    Lagardère has entered into a shareholders’ agreement which will confer the position of a privileged strategic partner and principal private shareholder of Aerospatiale Matra. In this context :

• The development of further links with other companies in the sector will take place in accordance with industrial co-operation agreements and the approval of Lagardère and the French Government.
• Lagardère has a right of pre-emption when the public sector reaches the threshold of 20%, a right which is to be exercised on the residual public sector shareholdings. French Government has a right of pre-emption on any shares Lagardère wishes to dispose of.
• Lagardère will maintain its holding in Aerospatiale Matra at 33% ; Aerospatiale Matra, which will incorporate the French Government’s holding in Dassault Aviation and exclude Aerospatiale’s 4% holding in Thomson-CSF, will be listed on the French bourse as a Limited Liability Company (” Société Anonyme “) with a Supervisory and a Management Board.
• The President of the Supervisory Board and the President and the members of the Management Board will be appointed jointly by the Government and Lagardère, taking into account the nominations of Lagardère. The terms of reference of the Management Board of the new group as well as the principal decisions of this Board will be agreed between the two primary shareholders, the Government and Lagardère. The Government and Lagardère have already agreed to appoint on the one hand Mr. Jean-Luc Lagardère as President of the Supervisory Board and on the other hand, as members of the Management Board, Mr. Yves Michot as Chairman and Mr. Philippe Camus as Chief Executive.

    The Commission des participations et des transferts will examine the draft agreement before giving its opinion ; such draft will, at the same time, be submitted to the European Commission in Brussels, to the works councils of Aerospatiale and of the companies which form Matra Hautes Technologies, to the Management Board of Aerospatiale and to the Supervisory Board of Lagardère before being submitted to an Extraordinary General Meeting of the shareholders of Lagardère.

    The timetable for the envisaged operations is forecast to be achieved before the end of the first half of 1999 as initially expected.

    Reacting to this event Jean-Luc Lagardère commented :

    “It is my duty and pleasure, before all else, to express my gratitude to, and pride in, all those at Matra who, for almost forty years, have selflessly dedicated themselves to creating a dynamic force for innovation and creativity which is recognised in Europe and throughout the world. It is a great honour for my group of companies to stand alongside French Government at this moment of European and global integration, because in creating Aerospatiale Matra, the fifth largest group in the world, my group is leading France into the forefront of global aeronautic, space and defence markets.

    I am aware of Aerospatiale’s potential. I am familiar with their achievements and the very real advantages they possess. I have a a great deal of respect for the company’s management, but if we are to meet the new challenges facing all of us, we must be stronger. The birth of Aerospatiale Matra is just one decisive step in the enormous restructuring movement now taking place in Europe and around the world. There is no doubt that we will be key players in that movement, with a clear obligation to be competitive in every sense of that word whilst, at the same time, creating employment and adding value for our shareholders. The challenge is an exhilarating one and we must not underrate its difficulty, but I am confident. We will succeed.

    For a long time now, my Group has built special relationships by creating joint-venture companies with the major European players who are now our English and German partners, soon to be joined by their Italian and Spanish counterparts. We will do our utmost to continue the pursuit and development of this Europe-wide co-operation within the framework of Aerospatiale Matra, and to defend its interests fearlessly “.