96.8 percent of Brazil’s Embraer shareholders have voted in favour of the sale of 80 percent of the company’s commercial plane division to The Boeing Company (Boeing). The sale will now only require global antitrust regulator approval. According to Reuters, Boeing will pay US$4.2 billion, and the 20:80 joint venture between Embraer and Boeing will concentrate on supplying passenger jets with up to 150 seats to commercial airlines.
The strategic move sees Boeing now able to challenge its main Rival, in this sector of the market after Airbus completed its purchase of a controlling stake in the Bombardier CSeries of aircraft, which also have less than 150 seats
The shareholder decision comes on the back of last month’s decision by the Brazilian government, which holds a right of veto over important Embraer business decisions. Embraer has openly admitted that the company has been in need of crucial financial investment as it has been struggling while Boeing and Airbus squeeze out smaller rivals. Embraer executives said earlier this year they would be able to wipe out the company’s current debt thanks to Boeing’s cash, giving them what they described as a fresh start.
“The potential operation with Boeing will save Embraer,” lawyers for the Brazilian planemaker said in July in a court filing as it battled an earlier challenge to the deal.
Principal opposition to the sale of Embraer’s commercial plane division have centered on the fact this will remove the profitable arm of the company, leaving the non-profitable defense and executive jet sectors vulnerable. However, part of the deal with Boeing will see the newly formed company, which is yet to be named, market Embraer’s new KC-390 military cargo jet. Embraer will retain ownership of the plane’s intellectual property but hopes Boeing will drum up orders from allies of the United States.
