Embraer and Boeing reach consensus on terms of the strategic aerospace partnership in which Boeing will acquire an 80 percent ownership stake in the joint venture for $4.2 billion. The transaction remains subject to approval by the Government of Brazil.
The approved terms define the Joint Venture (JV) comprising the commercial aircraft and services operations of Embraer, in which Boeing will hold an 80 percent ownership stake and Embraer will hold the remaining 20 percent.
After government's approval, Embraer and Boeing intend to execute definitive transaction documents. The closing of the transaction will then be subject to shareholder and regulatory approvals and customary closing conditions, Embraer said in a statement Monday.
The partnership is expected to be neutral to Boeing’s earnings per share in 2020 and accretive thereafter. Estimated annual pre-tax cost synergies of approximately $150 million are anticipated by the third year of operations.
Once the transaction has closed, the commercial aviation JV will be led by Brazil-based management, including a President and CEO. Boeing will have operational and management control of the new company, which will report directly to Dennis Muilenburg, Boeing Chairman, President and CEO. Embraer will retain consent rights for certain strategic decisions, such as transfer of operations from Brazil.
The companies have also agreed to the terms of another JV to promote and develop new markets for the multi-mission medium airlift KC-390. Under the terms of this proposed partnership, Embraer will own a 51 percent stake in the JV, with Boeing owning the remaining 49 percent, the company further stated.