Boeing to acquire stakes in Embraer operations for $4.2 billion

The deal will offer Boeing 80% ownership over Embraer’s aircraft and services operations in Brazil

U.S. aerospace conglomerate, Boeing Co. has recently agreed to the terms of investing $4.2 billion to acquire majority stake in Brazil’s aircraft manufacturer, Embraer S.A. As per sources, the deal will offer Boeing 80% ownership over Embraer’s operations and management, while Embraer holds remaining stakes and consent rights for decisions like transfer of operations from Brazil.

Sources cite that the acquisition of Embraer’s lineup of small regional aircrafts (E-jets) are yet to receive approval by Brazil’s newly voted government and will be subject to regulatory and shareholder approvals, expected to close by the end of 2019.

Reportedly, Brazil’s labor unions seemed concerned with the deal as Boeing might move some E-jet operations to the U.S. However, Boeing has earlier said that Embraer’s commercial operational facility near São Paulo, Brazil will become one of the company’s key centers for manufacturing, end-to-end design, and support of commercial passenger aircraft.

Citing the company’s statement, sources claim that Embraer’s engineers, besides designing the E-jets, will work on upcoming Boeing airplanes, including the New Midmarket Airplane or 797, expected to be launch in 2019.

According to The Seattle Times, the two companies also confirmed plans to form a separate joint venture to develop new markets for Embraer’s KC-390 military jet, which can be deployed as a cargo and troop transport plane and a refueling tanker. Under the terms of the proposed deal, Embraer will hold 51% stake in the KC-390 JV, while Boeing will own the remaining 49% stakes, report sources familiar with the developments.

Reliable reports cite that Boeing Brazil, following the deal’s closure, will become the company’s third largest commercial airplane design and manufacturing facility, after its major centers in the Puget Sound region and in South Carolina.