MIAMI — Once again, a Brazilian judge has blocked the sale of the Embraer’s commercial aviation business to Boeing. On December 19, the repeat injunction allegedly follows a class action suit placed by the Brazilian planemaker’s unions, who claim that should the deal go forward, job losses will occur in Brazil.
The same judge issued a similar injunction in early December, followed legal actions by a group of Brazilian who tried to stop the deal from moving forward. However, it was successfully overturned last week.
Yesterday’s injunction, however, was backed by four left-wing congressmen.
Embraer issued a statement, stating that “The company will take all applicable judicial measures to revert this decision and will keep its shareholders and the market informed on any material developments related to the public civil action.”
An official statement from Boeing has yet to be heard.
Both Boeing and Embraer announced on Monday that they had finalized the agreement on their deal, raising Embraer’s valuation to $5.26 billion.
Boeing and Embraer agreed to the terms for the strategic partnership both manufacturers are seeking to remain competitive against the Airbus and Bombardier marriage that occurred earlier this year.
The new agreement between the American and Brazilian manufacturers will come as a Joint Venture where Boeing will hold an 80% stake in Embraer’s Commercial Aircraft Services Operations, while Embraer remains with a 20% stake.
Once the deal is complete, the Joint Venture will have its main offices in Brazil, with a President and Chief Executive Officer reporting directly to Boeing’s CEO, Dennis Muilenburg.
Any agreement coming out of the potential sale of Embraer’s assets need the approval from the Brazilian government, which owns a “golden share” in the manufacturer.
The Brazilian judge, Victor Giuizo Neto, who issued the injunction, said that “The brutal asymmetry in the shareholder structure of this venture prevents it from being carried out without compromising the survival of national interests.”