Brazilian government approves Boeing-Embraer deal | International Flight Network

Cornelia Mascio
Gennaio 13, 2019

The Brazilian government announced on Thursday that it had approved the creation of two joint ventures (JVs) between Brazilian aerospace company Embraer and U.S. aerospace group Boeing.

But now the US$5.2 billion deal, which will see Boeing take control of Embraer's commercial airplane manufacturing business - 80 per cent of its operation - will go ahead.

The Brazilian government today approved the creation of a joint venture that would give Boeing control over Embraer's commercial airplane operation.

Embraer shares rose as much as 10 percent on Friday, the most intraday in more than a year, after the Brazilian government announced it won't veto the deal with Boeing Co. The next one is to have the agreement ratified by the Board of Directors of Embraer, then it will be the time to prepare the definitive documents of the transaction.

The closing of the transaction will be subject to shareholder and regulatory approvals and is meant to be finalised by the end of 2019.

"Assuming the approvals are received in a timely manner, the transaction is meant to close by the end of 2019", Boeing said in a statement.

Boeing said last month the partnership was expected to be neutral to its earnings per share in 2020 and accretive thereafter. Furthermore, the Brazilian regional jet manufacturer will own a 51 percent stake in a second joint venture "to promote and develop new markets" for the KC-390 military transport aircraft.

Shortly after assuming the presidency on January 1, Bolsonaro, a former army captain, had expressed concern that Boeing might end up owning all of Embraer if the deal was approved under the terms proposed.

BTG Pactual reiterated its buy rating for Embraer's American depositary receipts after the Brazilian government's decision.

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