Published: Sun, January 13, 2019
Finance | By Loren Pratt

Embraer shares take off after Bolsonaro approves Boeing merger - DN - Defence Notes

Embraer shares take off after Bolsonaro approves Boeing merger - DN - Defence Notes

Embraer was founded as a state group in 1969 before being privatized in 1994, although the Brazilian government retained a "golden share" giving it the right to veto strategic decisions for the company. In December, both detailed plans to purchase 80 percent of Embraer's commercial jetliner by Boeing and the creation of a second joint venture to produce and sell the KC-390 military transport jet.

Boeing and Embraer believe the joint venture has the potential to offer a commercial aircraft portfolio ranging from 70 seats to more than 450 seats.

However, in order for the partnership to be effective, it will still take several steps.

It will pit Embraer's E-Jet family against the A220s in regional and medium-haul markets.

This allowed Airbus to add the Canadian company's impressive C Series family to its aircraft portfolio and rename it the A220.

At the moment, the Brazilian government has full veto power at Embraer but would be forced to give up all control of the nation's aircraft manufacturer to the American company.

"Once Embraer's Board of Directors ratifies its prior approval, the two companies will then execute definitive transaction documents, " Boeing said.

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".

The terms of the partnership companies agreed in December a year ago.

Boeing would have operational and management control of the company.

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.

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