Boeing will pay $ 4.2 billion for a stake in a joint venture with Embraer
Boeing agreed on the terms of a strategic partnership for acquiring the Embraer commercial aircraft program. Under the terms of the deal, the American aircraft manufacturer will pay $ 4.2 billion for 80% of the shares of the joint venture (JV). Initially, in July 2018, this amount was announced at the level of $ 3.8 billion.
The change in the amount of the transaction is related to the revised value of the entire joint venture, which is now estimated at 5.26 billion (previously this figure was at the level of 4.75 billion dollars). The joint venture includes Embraer's commercial aircraft and services business.
The American aircraft manufacturer emphasizes that the partnership should not affect the shares of Boeing in 2020, and further lead to growth. According to preliminary estimates of the company, the annual synergy of expenses before tax will be about $ 150 million by the third year of the joint venture.
The deal has yet to be approved by the Brazilian government, after which the two companies will finalize the final documents. To close the deal and create a joint venture, aircraft manufacturers will need to get approval from shareholders and government agencies.
Brazilians should take the positions of president and chief executive officer of the joint venture, but Boeing will receive operational and administrative control over the company, which will be subordinated directly to the chairman of the board of directors and president of Boeing, Dennis Muhlenburg. Embraer will retain the right to vote on certain strategic decisions, such as transferring operations from Brazil.
After acquiring Embraer civilian programs, the Boeing product line will include aircraft with a passenger capacity of 70 to 450 seats and more. At the moment, the main commercial product of Embraer are aircraft of the E-Jets family with a capacity from 70 to 120 seats. Recall that in April of this year, the Brazilian aircraft manufacturer began supplying a remotorized version of this E-2 family. The capacity of today's Boeing aircraft starts from 150 seats (Boeing 737-700).
After completion of the transaction, the American aircraft manufacturer will enter the regional aircraft market, on which the main competitor of the corporation is already present - the European aircraft manufacturer Airbus, which received control of the Bombardier CSeries narrow-body aircraft program on July 1, which was later renamed Airbus A220.