Embraer Commercial Plane Boss Supportive of Boeing Tie-Up

By Robert Wall

DUBLIN--A top executive at Brazilian plane maker Embraer SA said Tuesday that talks about a tie-up with Boeing Co. were continuing and that he was upbeat about closer links between two of the world's largest airliner producers.

Boeing Co. (BA), the world's largest plane maker, and No. 3 Embraer SA (ERJ) last month confirmed a report in The Wall Street Journal that they were in talks about combining.

Chief Executive of Embraer Commercial Aviation John Slattery said that "as a leader of the largest business within Embraer, commercial aviation, I am positive towards what a potential outcome could be."

Embraer, known for making regional jets and military planes, and Boeing had informally agreed to terms that would value the Brazilian company at $28 per U.S. share, people familiar with the matter said. Mr. Slattery wouldn't address details of the negotiations, but said there were a lot of "cultural synergies" between the two companies that have in the past cooperated on some commercial airplane research and military projects.

The Brazilian government has signaled it would resist an outright takeover, though. President Michel Temer said the government wouldn't permit a change in control of Embraer, though it would welcome new investment.

The companies are now trying to overcome the government's resistance, which centers largely on Embraer's defense business. The Brazilian government has a golden share in Embraer that gives it effective veto over a deal.

Boeing is willing to take steps to protect Embraer's brand, management and jobs, people familiar with the matter have said.

"Boeing is an organization that's deeply respected within Brazil and within Embraer," Mr. Slattery told the annual Airline Economics Growth Frontiers conference on Tuesday. "We now have to respect the requirements of our government that holds a golden share," he said, adding that "the conversations are ongoing." He wouldn't prejudge the outcome.

The talks come as rival Airbus SE (AIR.FR) and Canada's Bombardier Inc. (BDRBF) are working on closer ties. Airbus last year agreed to take control of a joint venture to build Bombardier's CSeries narrowbody plane. The deal could close by mid-year, slightly earlier than planned, an Airbus official said this week.

The two transactions, if they are approved, would provide the biggest shakeup in decades in the global plane-making business.

Write to Robert Wall at [e-mail]

(END) Dow Jones Newswires

January 23, 2018 08:23 ET (13:23 GMT)

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