Brazil regulators approve Boeing and Embraer tie-up
Boeing and Embraer have obtained the authorization for their joint venture by Brazilian regulators. The two companies are now waiting for the final approval from European authorities.
After several months of political debates in the midst of the Brazilian presidential elections, the proposal to establish a joint venture with Boeing had received the green light from the government in January 2019. A month later, Embraer shareholders approved the tie-up during an extraordinary general shareholders' meeting. From then, both parties had to obtain regulatory approvals and the satisfaction of other customary closing conditions to close the transaction.
That has now been partially done. Having gained approvals from the United States, China and Japan authorities, Boeing and Embraer have received “the unconditional approval of their strategic partnership” by the Administrative Council for Economic Defense (CADE) of Brazil, the companies announced on January 27, 2020. The decision will be final within 15 days, "unless a review is requested by the CADE commissioners."
"This latest clearance is yet another endorsement of our partnership, which will bring greater competition to the regional jet marketplace, better value for our customers and opportunities for our employees," said Marc Allen, Boeing's president of Embraer Partnership & Group Operations in a joint statement. "Brazil's approval of the deal is a clear demonstration of the pro-competitive nature of our partnership," said Francisco Gomes Neto, president and CEO of Embraer.
Now, the European Commission remains to be the only thing standing in the way of the merger. Their antitrust investigation was suspended after “the parties fail[ed] to provide, in a timely fashion, important information that the Commission has requested from them”. It resumed in early January 2020. EU’s final decision is expected by April 30, 2020.
Since 2018, Boeing has been trying to acquire an 80% stake in Embraer commercial aviation activities, including aftermarket support services, for $4.2 billion. The new company, renamed Boeing Brasil, should be led by a Brazilian-based management team with a president and CEO. Boeing would have “operational control and management”.
Their second enterprise, called Boeing Embraer – Defense, and set to develop and sell the C-390 Millennium multi-mission airlifter, is also pending regulatory approvals.
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