Embraer and Boeing have approved the terms of a
The approved terms define the joint venture
comprising the commercial aircraft and services operations of
Embraer, in which Boeing will hold an 80% ownership stake
and Embraer will hold the remaining 20%.
remains subject to approval by the Government of Brazil, after
which 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
Under the terms of the proposed partnership, Boeing
will acquire an 80% ownership stake in the joint venture
for $4.2 billion. 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.
the transaction has closed, the commercial aviation joint venture
will be led by Brazil-based management, including a president and
chief executive officer. Boeing will have operational and
management control of the new company, which will report directly
to Dennis Muilenburg, Boeing chairman, president and chief
executive officer. Embraer will retain consent rights for certain
strategic decisions, such as transfer of operations from Brazil.
Dennis Muilenburg, Boeing chairman, president and chief executive
officer, said, "Boeing and Embraer know each other well through
more than two decades of collaboration, and the respect we have
for each other and the value we see in this partnership has only
increased since we announced our joint efforts earlier this year."
The companies have also agreed to
the terms of another joint venture 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% stake
in the joint venture, with Boeing owning the remaining 49%.
The transaction is subject to approval by the
Government of Brazil, ratification by the Embraer Board of
Directors and its further authorization to execute the definitive
transaction documents. Once the parties have executed the
definitive transaction agreements, the strategic partnership will
then be subject to shareholder and regulatory approvals, as well
as other customary closing conditions. Assuming the approvals are
received in a timely manner, the transaction is intended to close
by the end of 2019.
Paulo Cesar de Souza e Silva, Embraer president
and chief executive officer, said, "We are confident that this
partnership will deliver great value to Brazil and the Brazilian
aerospace industry as a whole. This alliance will strengthen both
companies in the global market and is aligned with our long-term
sustainable growth strategy."
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