Boeing Inks Deal to Take Over Embraer’s Commercial Jetliner Business

The deal mirrors a similar move by Airbus with recent deal to take control of Bombardier’s CSeries program.

A mega deal that some wondered whether it would ever come to fruition is now a done deal. Boeing is taking control of Embraer’s commercial jetliner business, agreeing on Thursday to pay $3.8 billion for a larger slice of the global plane making pie that puts the world’s biggest plane makers on a collision course after rival Airbus inked a similar deal to take over Bombardier’s CSeries jet program.

Boeing said it will own an 80 percent stake in Embraer’s commercial airplane and services business. Embraer will retain the remaining 20 percent in the joint venture valued at $4.75 billion.

Boeing and Embraer have been working on the tie-up for months, but worries in Brazil about the partnership with the U.S. giant made it unclear whether a deal would be struck. Workers at Embraer plants in Brazil have protested over the deal recently.

Under the memorandum of understanding announced by both companies, management will be based in Brazil, but the venture will be controlled by Boeing, which is based in Chicago.

The companies also said that they would form another joint venture focused on “new markets and applications for defense products and services,” such as Embraer’s KC-390 military plane. Embraer executives said the Brazilian company would have a majority interest in the defense unit but that the details haven’t been worked out.

Boeing will pay Embraer $3.8 billion in the all cash sale. Embraer Executive Jets, maker of the Phenom, Legacy and Lineage lines of business jets, will remain a separate company.

The deal is expected to close by late 2019 pending regulatory approval. Embraer has the right to force Boeing to buy the remaining 20 percent of the joint venture at any time over the next decade.


New to Flying?


Already have an account?