The Brazilian government has approved the proposed take over of the civilian part of Embraer (EMB, São José dos Campos Professor Urbano Ernesto Stumpf) by Boeing (BOE, Washington National), Reuters has reported.
In a statement issued on January 10, the government in Brasilia okayed the transaction as proposed by the two manufacturers. Under the proposal, the civilian part of Embraer will be transferred to a new joint venture, in which Boeing will take an 80% stake for USD4.2 billion. The new company will be based in Brazil and will have a local CEO reporting directly to the Boeing CEO.
The military wing of Embraer will remain separate with the Brazilian government still holding a golden share. A special board will also guard that no military secrets or know how are transferred to Boeing.
The two companies will also form a 51/49 joint venture to promote and develop new markets for Embraer's multi-mission medium airlift KC-390, with the Brazilian manufacturer holding the larger share.
"Once Embraer's Board of Directors ratifies its prior approval, the two companies will then execute definitive transaction documents. The closing of the transaction will be subject to shareholder and regulatory approvals and customary closing conditions. Assuming the approvals are received in a timely manner, the transaction is intended to close by the end of 2019," the manufacturers said in a statement.
The new president of Brazil Jair Bolsonaro previously expressed concerns about the deal and cast doubt whether he would approve it in the proposed form or ask for a revision of terms.
