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For $4.75 Billion Boeing strikes aircraft deal with Brazilian Embraer

July 6, 2018

Two aviation giants – Boeing and Embraer – announced on Thursday, July 5th the creation of a new joint venture in the area of commercial aviation valued at $4.75 billion. Under the terms of the agreement, Boeing will hold 80% of the new business and Embraer, the remaining 20%.

The new company agreement is solemn regarding regional jets, passenger planes with about 100 seats and ranges up to 5,000km. None Airbus or Boeing builds such aircraft.

Boeing, the world’s largest aircraft maker, is expected to pay $3.8 billion for 80% of the joint venture. Embraer will have the option to sell its 20% stake, subject to approval by the Board.

“The non-binding agreement proposes the formation of a joint venture comprising the commercial aircraft and services business of Embraer that would strategically align with Boeing’s commercial development, production, marketing and lifecycle services operations,” the companies said in a statement.

In a conference call to shareholders, Embraer clarified that it would continue to be a listed company and the Brazilian government’s right over Embraer will be maintained.

The federal government owns a “golden share” in Embraer, which guarantees veto power in the strategic decisions of the company, including the transfer of share control. 

 

Agreement depends on approval

The transaction depends on the endorsement of shareholders – among which, in the case of Embraer is the Brazilian government – and the regulatory bodies of the Brazilian and American market.

If the approval occurs in the expected time, the transaction is supposed to be closed by the end of 2019, between 12 and 18 months after the definitive agreements.

According to the companies, once the transaction is completed, the joint venture in commercial aviation will be led by a team of executives based in Brazil. Boeing will have operational and management control of the new company.

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Call Us At: 305 397 8788

605 Lincoln Road Suite 302 Miami Beach, FL 33139

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