Boeing to Take Over Brazil's Embraer Commercial-Jet Business

By Andrew Tangel and Kimberly Chin 

Boeing Co. will take over Brazil's Embraer SA's commercial business in a deal announced Thursday, extending the U.S. plane maker's reach into the market for smaller passenger jets.

Under the agreement, Boeing will take control of Embraer's commercial airplane and services businesses. The Chicago-based plane maker will have an 80% ownership stake, and Embraer will own the remaining 20% in what was described as a joint venture. The deal valued Embraer's commercial-aircraft operations at $4.75 billion

Embraer's Brazil-based management will lead the proposed venture, though Boeing would have operational and management control of the new company. Management would be expected to report directly to Boeing's Chief Executive Dennis Muilenberg.

The Wall Street Journal reported in December that Boeing and Embraer were in takeover talks. The companies had been working to overcome the Brazilian government's resistance to the deal centering in large part on Embraer's defense business.

The proposed venture is expected to create about $150 million in annual pretax cost savings for Boeing by its third year, the company said.

Write to Andrew Tangel at [e-mail]

(END) Dow Jones Newswires

July 05, 2018 07:52 ET (11:52 GMT)

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