Boeing (BOE, Washington National) has proposed to take up to 80-90% in a new joint-venture with Embraer which would only include the civilian unit of the Brazilian manufacturer, O Globo has reported.
The offer is seen as a concession to the Brazilian government which vehemently objected to any tie-up that included Embraer's military unit. The proposal has been tentatively welcomed by the authorities in Brasilia, sources told the paper.
Under the terms of the deal, Brazil would only retain a 10-20% stake in Embraer's civilian operations, which would then report directly to Boeing's headquarters in Chicago. The American manufacturer would acquire its stake in cash. Valor speculates that most of the proceeds would be distributed in the form of a dividend to the existing shareholders. Such a transaction needs the approval of Embraer's shareholders and is not expected to go ahead before the second quarter of 2018.
If the transaction is approved, the new joint-venture would then sign commercial agreements with both Boeing and Embraer. Embraer would lose direct influence over how the business is run but would receive dividends in proportion to its share.
The more sensitive defence unit of Embraer will keep its current shareholders' structure with the government holding a veto power over all decisions.
However, according to the Financial Times, a joint-venture is only one of many options being analysed by the companies and has yet to be formally presented to the Brazilian government.
