Brazil's Temer Says Embraer Will Remain Under Brazilian Control -- Update
December 22 2017 - 2:15PM
Dow Jones News
By Luciana Magalhaes and Jeffrey T. Lewis
SÃO PAULO -- Brazil's government would welcome new investment in
Brazilian aircraft maker Embraer SA, but won't permit a change in
control of the company, Brazilian President Michel Temer said
Friday.
Embraer and Boeing confirmed Thursday that they have discussed a
plan for the U.S. company to buy the smaller Brazilian aircraft
maker. The combination would fortify Boeing in the market segment
for smaller, so-called regional jets, where the company currently
has little presence.
The Brazilian government holds a veto over any transaction that
would transfer control of the company, which was originally
state-owned and still has close ties to the country's military
establishment.
"Embraer is Brazilian, it represents Brazil very well abroad,"
Mr. Temer told reporters Friday. "An injection of foreign capital
would be welcome. But we won't consider the question" of a change
of control.
Embraer declined to comment on Mr. Temer's stance. Boeing
spokesman Phil Musser said the proposed deal with Embraer offered
synergies covering commercial jet and defense sales, as well as
services.
"As we noted, discussions are ongoing, but we have always had
deep respect for the role of the government of Brazil, as well as
their important defense and security concerns," he said.
The two companies already cooperate on some military projects.
Embraer has a lot to gain from a closer partnership with Boeing,
especially in the segment of regional craft, according to Pedro
Galdi, an analyst at São Paulo brokerage Magliano Corretora.
"Neither the government nor the military will let Embraer go, it
wouldn't make sense to sell off a company with strategic value," he
said. "But Embraer would benefit (from a closer partnership)
because Boeing has huge marketing power."
Many Brazilians say they would like to see the company stay
Brazilian.
"This is a question of national sovereignty," said Wesley
DeLucca, 30 years old, a personal trainer from São Paulo. "Brazil's
isn't number one in many things, but Embraer is first in its
segment. I think the government should veto a sale."
The talks come after an announcement in October by Boeing rival
Airbus SE of a deal to take a majority stake in the jetliner
business of Canada's Bombardier Inc., which competes with Embraer
in the regional jet market.
Embraer, based in the city of São José dos Campos in the state
of São Paulo, is the world's third-largest commercial-jet
manufacturer by revenue and has some 18,000 employees. It is best
known for making regional jets in the 70- to 100-seat range, which
are heavily used on routes where demand doesn't warrant use of
larger Boeing or Airbus planes. Its new E2 jet can carry up to 140
passengers.
Boeing's smallest jet has around 130 seats. The company hadn't
previously indicated interest in smaller planes. Embraer's defense
offerings include the A-29 Super Tucano light-attack and advanced
trainer aircraft and the KC-390 military cargo plane, which is
marketed by Boeing as part of a joint venture.
Write to Luciana Magalhaes at luciana.magalhaes@wsj.com and
Jeffrey T. Lewis at jeffrey.lewis@wsj.com
(END) Dow Jones Newswires
December 22, 2017 14:00 ET (19:00 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Embraer (NYSE:ERJ)
Historical Stock Chart
From Aug 2024 to Sep 2024
Embraer (NYSE:ERJ)
Historical Stock Chart
From Sep 2023 to Sep 2024