Boeing Co. is wooing Embraer SA with a plan to form a commercial-jet venture instead of an outright acquisition, people familiar with the talks said.
The two planemakers have made good progress on the framework for a deal, but hurdles remain and the final terms are still being hammered out, said one of the people, who asked not to be named because the negotiations are private. While another person said Boeing presented a plan on Thursday, Embraer said on Friday that it had yet to receive a proposal — while confirming that talks were ongoing and possibilities include the creation of new companies.
It’s not clear whether a jointly operated company would encompass all or part of Embraer’s commercial-aircraft unit. Embraer’s military business would be excluded, potentially resolving the Brazilian government’s concerns over national interests. Brazil holds a so-called ‘golden share’ in Embraer that gives it the power to veto the transaction.
A tie-up would extend a tectonic shift in the commercial-plane industry that was triggered in October when Airbus SE agreed to take control of Bombardier Inc.’s C Series jet — a competitor to an Embraer jet due to debut this year. Boeing lost a bid last week to block the C Series from the US market, when the US International Trade Commission ruled against the Chicago-based planemaker.
Analysts had expected the companies to focus on forging a joint venture after an earlier Boeing bid to take control of Embraer, one of Brazil’s most prominent manufacturers, drew swift opposition from Brazilian President Michel Temer. “All partnerships are welcome, what is not under consideration is transferring Embraer’s control to another company,” Temer said at the time.
Boeing and Embraer have “highly complementary product lines”, Dennis Muilenburg, the US company’s chief executive officer, said on an earnings call on January 31. He said Boeing was trying to find the right deal structure for a combination with the Brazilian company.
Embraer rose 4.4 per cent to 21.30 reais at 5:37 pm in Sao Paulo after advancing as much as 9.3 per cent for the biggest intraday gain in six weeks. Boeing fell 1.2 per cent to $350.79 amid a broader selloff in New York.
O Globo reported earlier on the potential commercial jet venture. Boeing declined to comment. Brazil’s defence ministry didn’t immediately respond to a request for comment.
