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Brazil approves Boeing and Embraer strategic partnership

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Dal Kikin
January 11, 2019

Earlier, the Brazilian aircraft manufacturing concern Embraer SA and the American corporation Boeing announced the final approval of the terms of a strategic partnership. The further fate of the transaction depends on the decision of the authorities of Brazil.

Brazilian President Zhair Bolsonar wrote in his microblog on Twitter after a meeting with cabinet ministers that the merger of Embraer and Boeing does not pose a threat to the sovereignty of the country. In this regard, the government will not interfere with the transaction.

"Embraer and Boeing welcome the approval by the Brazilian government of their strategic partnership, which will allow both companies to accelerate growth in the global aerospace markets," the release says. Now the transaction must be approved by shareholders and the competent authorities. Closing of the transaction is expected by the end of this year.

The terms of the partnership companies agreed in December last year. It is about creating a joint venture, which includes the production of commercial aircraft and Embraer services, in which Boeing will buy a share of 80% for $ 4.2 billion, and Embraer will own the remaining 20%. In addition, the companies agreed to create another joint venture for the promotion and launch of the Embraer KC-390 medium-range aircraft. In this joint venture Embraer will own 51% of the shares, and Boeing - 49%.

The creation of a joint venture for the production of regional machines based on the commercial aircraft division of Embraer was announced in July of this year. In December, a Brazilian court made a preliminary decision to suspend the creation of an alliance between Boeing and Embraer. However, later in December, a federal-level appellate court overturned this ban on the deal.

Boeing produces a wide range of civil and military aviation equipment, develops space programs. In the structure of Boeing, there are two large divisions - Boeing Commercial Airplanes, engaged in the construction of civil aircraft, and Integrated Defense Systems, which runs space and military programs. The staff is about 140 thousand people.

Embraer is a Brazilian aircraft manufacturing conglomerate, one of the leaders of the global market for passenger regional aircraft. The company also produces corporate, military, agricultural aircraft.

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