Embraer and Boeing Approve Joint Venture Terms
December 17 2018 - 7:06AM
Dow Jones News
By Patrick Thomas
Boeing Co. (BA) and Embraer SA (ERJ) have approved the terms of
a $4.2 billion joint venture that will give the Chicago-based
Boeing control over Embraer's commercial jetliner business.
Under the agreement that was announced this summer, Boeing will
take an 80% stake in Embraer's commercial airplane and services
business. The Sao Paulo, Brazil-based Embraer will own the
remaining 20%.
Boeing will have operational and management control of the new
company. The commercial aviation joint venture would be led by
Brazil-based management, including a president and chief executive
officer. The estimated annual pre-tax cost synergies of
approximately $150 million are seen by the third year of
operations.
"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," Boeing Chief
Executive Dennis Muilenburg said in a statement.
The companies also said they have agreed to the terms of a joint
venture to promote and develop new markets for the multi-mission
medium airlift KC-390, with Embraer owning a 51% stake and Boeing
the remaining 49%.
The transaction, subject to approval from Brazil's government
and ratification by Embraer's board of directors, is expected to
close by the end of 2019.
Write to Patrick Thomas at patrick.thomas@wsj.com
(END) Dow Jones Newswires
December 17, 2018 06:51 ET (11:51 GMT)
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