MIAMI — Boeing and Embraer have 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.
All that is left for the deal to go through is the Brazilian government’s approval, after which Boeing and Embraer will put together the definite traction documents. The partnership will then be subject to shareholder and regulatory approval from both USA and Brazilian authorities.
Boeing will acquire an 80% stake of Embraer for $4.2 Billion.
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.
Boeing, however, will have direct control over the operations and management sides of the Joint Venture.
Both Boeing and Embraer expect to complete all transactions related to the agreement by the end of 2019.
On top of this, the two companies have agreed on a separate Joint Venture to promote and develop the Embraer KC-390, a multi-mission medium airlifter.
The deal will see Boeing acquiring a 49% stake in the program, with Embraer holding the remaining 51% stake.
“Boeing and Embraer know each other well through more than two decades of collaboration, and the respect we have for each other and the value we see in this partnership has only increased since we announced our joint efforts earlier this year,” said Muilenburg.
Paulo Cesar de Souza e Silva, Embraer CEO, added that his side is, “confident that this partnership will deliver great value to Brazil and the Brazilian aerospace industry as a whole. This alliance will strengthen both companies in the global market and is aligned with our long-term sustainable growth strategy.”
Muilenburg later tweeted that this partnership “is a major step toward bringing together two world-class teams and highly complementary product and service portfolios. We expect our proposed partnership will generate significant value for our customers, team members and shareholders.”