Boeing (BOE, Washington National) and Embraer (EMB, Sao Jose dos Campos) have approved the terms of their proposed strategic partnership wherein the American manufacturer would acquire an 80% stake in a joint venture firm with the commercial part of Embraer for USD4.2 billion.

The partnership values the entire JV at USD5.26 billion. Embraer expects to earn, net of separation costs, some US3 billion.

Once the transaction has closed, the commercial aviation joint venture will be led by Brazil-based management, including a president and chief executive officer. Boeing will have operational and management control of the new company, which will report directly to Boeing's chairman, president and chief executive officer. Embraer will retain consent rights for certain strategic decisions, such as transfer of operations from Brazil. The manufacturers will have 80% and 20% voting rights, proportionately to their respective shareholdings.

Both manufacturers vowed to retain their stakes in the new JV for at least ten years under a lock-up rule.

The partnership also foresees a separate joint venture to promote the sales and development of Embraer's military transport aircraft KC-390. The Brazilian manufacturer will hold a 51% stake in this JV, while Boeing will hold the remaining stock.

Embraer will continue to own its defence and business jet segments. The manufacturer will also remain listed on Brazil's B3 stock market with the government of Brazil retaining its golden share in the company.

The establishment of the joint venture is still subject to approval by the Brazilian government and shareholders of both companies. The President-Elect of Brazil Jair Bolsonaro, due to take office on January 1, 2019, had previously expressed his support for the deal. The manufacturers expect the transaction to close by the end of 2019.