Boeing-Embraer merger going ahead after Bolsonaro approval

Boeing-Embraer merger going ahead after Bolsonaro approval

Embraer will sell 80 percent of its commercial aviation business to Boeing in the deal.

The Brazilian government announced on Thursday that it had approved the creation of two joint ventures (JVs) between Brazilian aerospace company Embraer and U.S. aerospace group Boeing.

Earlier, the Brazilian aircraft manufacturing concern Embraer SA and the American corporation Boeing announced the final approval of the terms of a strategic partnership. The government holds a so-called "golden share" in Embraer, a private company, that allows it to veto important business decisions.

Once Embraer's board ratifies its prior approval, the two companies will then execute definitive transaction documents.

In a joint statement, both companies said their deal's conclusion now will be subject to shareholder and regulatory approvals.

"Assuming the approvals are received in a timely manner, the transaction is meant to close by the end of 2019", Boeing said in a statement.

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Embraer will have to consent to strategic decisions such as the transfer of operations from Brazil.

The terms of the partnership companies agreed in December previous year.

It estimated there would be annual pre-tax cost synergies of approximately $US150 million by the third year of operations.

Boeing would have operational and management control of the company.

Boeing plans to take control of Embraer by creating a joint venture and with that better compete against rivals Airbus and Bombardier, which formed a joint venture for the construction and sale of the Airbus A220 (formerly known as Bombardier CSeries) in July 2018.

The agreement approved by Bolsonaro also foresees a partnership for the commercial promotion of KC-390, the military transport airplane developed by Embraer.

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