In December 2017,
The Wall Street Journal reported
Boeing had been in takeover talks with
Embraer and was planning to offer more than the Brazilian company's $3.7 billion
market value and was awaiting
Brazilian government approval. The two companies confirmed that a potential combination was being discussed, with a transaction subject to approval by the Brazilian government and regulators, the two companies' boards and shareholders. Aviation industry analysts saw the potential deal as a reaction to the Airbus–Bombardier deal on the
CSeries. In the early years of Embraer, it was a state-run company and although it was privatized in the early 1990s, the Brazilian government retained interest in the company through possession of
golden shares, which allow it veto power. On December 22, 2017, Brazilian president
Michel Temer said the sale of Embraer to Boeing was "out of the question", adding that the government was in favor allowing other companies, like Boeing, to establish partnerships with the company, but warning that it would veto changes in stock control. On December 28, defense minister
Raul Jungmann opposed transferring control of the parent company Embraer S.A., because he believed that Embraer's defense business could not be separated from its commercial operations, but would welcome a deal maintaining local control of the company. On January 2, 2018, Brazilian financial newspaper
Valor Econômico reported that the companies were now looking at forming a
joint venture to avoid changing control of Embraer to appease Brazilian regulators.
July 2018 Memorandum of Understanding (bottom) pictured with a
Boeing 737-800 (top). The E-jets are smaller than the 737, which is Boeing's smallest airliner. On July 5, 2018, a
Memorandum of Understanding was announced for a
strategic partnership: for $3.8 billion Boeing would have an 80% stake in a
joint venture with Embraer, which would produce and service Embraer's commercial
airliners (the
ERJ,
E-Jet and the
E-Jet E2), a business that at the time was valued at $4.75 billion and offer $150 million worth of
corporate synergy opportunities. The joint venture should have $3.5 billion
assets against $1.4 billion
liabilities, for a $2.1 billion
equity value. The price paid by Boeing was seen as very favorable to Embraer compared to the amount paid by Airbus for the CSeries. In March, Boeing named Embraer's
John Slattery as CEO of the joint venture and
B. Marc Allen, a Boeing executive as president. On May 23, Boeing announced that the division would be known as "Boeing Brasil–Commercial," dropping the Embraer name, but had not yet decided whether to rebrand the aircraft as Boeing models. The joint venture also confirmed that airliner production would remain at the São José dos Campos factory, to be taken over by Boeing Brasil; while Embraer would move production of the
Legacy 450/500 and Praetor 500/600 executive jets to the Gavião Peixoto factory. The EU antitrust investigation was set to issue findings from its preliminary review on October 4, 2019, and intended to conduct a full investigation thereafter which could last up to five months. By then, Boeing and Embraer were expecting the transaction to close in early 2020. On November 12, 2019, Embraer confirmed the delay until at least March 2020. In January 2020, the partnership was approved by Brazilian authorities, and only the European Commission approval was lacking. By March 2020, the deal was not expected to close before June 23, 2020. On November 18, 2019, the two companies officially announced a second joint venture known as "Boeing Embraer – Defense" to promote and develop new markets for the C-390 Millennium. Embraer would keep a 51% stake in this proposed joint venture, which would also need to be approved by
shareholders and
government regulators Termination Boeing terminated the planned joint ventures on April 24, 2020, saying that Embraer did not satisfy the conditions established in their agreement. Industry analysts said that the $4.2 billion deal became unbalanced as Embraer's market value fell to less than $1.1 billion as air travel demand dropped as a result of the
impact of the 2019–20 coronavirus pandemic on aviation. Industry analysts speculated that Boeing may have also cancelled the deal because it had recently been awarded a
U.S. government pandemic relief loan, and wanted to avoid making the impression that funds intended to support U.S. jobs were instead used to secure a deal with a Brazilian firm. Embraer has rejected Boeing's reasons for the termination of the deal and said the company "has manufactured false claims as a pretext to seek to avoid its commitments" because of its financial condition after the
737 MAX groundings and "other business and reputational problems." Embraer threatened to pursue "all remedies against Boeing for the damages incurred." Industry analysts also believe that Embraer may file suit to recover the $100–120 million it spent separating its commercial and military units, and claim lost business opportunities as orders for new jets were slow while customers were waiting for the deal to close. Despite the termination of the two joint ventures, the agreement relating to marketing of the C-390 military aircraft remains, though analysts say the prospects of international sales facilitated by Boeing have diminished.
Asian alternative Hamilton Mourão,
Vice President of Brazil, proposed an alternative partnership with
China. Teal Group aerospace analyst
Richard Aboulafia was doubtful the partnership could work, while
Ascend global consultancy reckons going with China could get Embraer's foot in the door.
Arbitration In September 2024, the companies reached an agreement ("collar agreement") of 150 million
dollars (around 825 million
reais) for Boeing's decision to withdraw from negotiations in 2020. Boeing confirmed that an agreement had been reached, without mentioning the amount to be paid. As this is an
arbitration agreement, there is no provision for the parties to
appeal the decision. Analysts at
JPMorgan said that the amount was below expectations, noting that the forecast was for a
settlement of between 300 million and 400 million dollars. ==References==