Boeing and Embraer form $4.75 billion joint venture
Boeing and Embraer form $4.75 billion joint venture

Boeing and Embraer form $4.75 billion joint venture

Boeing and Embraer form $4.75 billion joint venture
Boeing and Embraer form $4.75 billion joint venture

Boeing and the Brazilian planemaker Embraer will attempt to form a joint venture that would push the U.S. aerospace giant more aggressively into the regional aircraft market. The new joint venture will consist of Embraer’s commercial aircraft and services divisions and Boeing’s commercial development, production, and marketing and lifecycle services operations.

The new company, which has faced heavy scrutiny from lawmakers in Brazil, is being valued at about $4.7 billion. Boeing will hold an 80% stake in the new joint venture, while Embraer, long considered a beacon of Brazilian industrial might, will retain the rest. The deal values Embraer’s commercial aircraft business at $4.75 billion, with Boeing’s stake in the joint venture valued at $3.8 billion.

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Brazilian lawmakers have been hesitant to allow any deal, fearing the loss of control of a major industrial and defense asset. Embraer is one of Brazil’s industrial giants, and the government sees the company, which is involved in defense manufacturing, as strategically important. President Michel Temer had previously rejected selling control of the jet maker to Boeing. Embraer is one of Brazil’s industrial giants, and the government sees the company, which is involved in defense manufacturing, as strategically important.

The Sao Jose dos Campos, Brazil-based manufacturer will remain a separate company that makes military and private jets while reaping a revenue stream from the new partnership. The structure, along with the company’s flagging sales and an increasingly challenging market, helped win the support of the Brazilian government. Boeing and Embraer said they plan to form a second joint venture to develop new markets for defense products and applications that bolster the Brazilian company’s military portfolio, including its KC-390 cargo aircraft.

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