BOEING EYEING BROAD EMBRAER DEAL
Aerospace group has yet to make a formal offer and shape of contract seen depending on talks with Brazil
BOEING Co is eyeing a broad partnership with Embraer reaching beyond commercial aircraft to defence and global services, but its shape hinges on talks with the Brazilian government.
The United States aerospace group has yet to make a formal offer and its final structure would be driven by talks that are expected to resume in coming weeks — but sources say the aim is to go well beyond traditional joint ventures or an equity infusion.
“A broader combination would be preferred but Boeing is sensitive to concerns the government may have about issues like defence. If those can be addressed ... this deal can get done,” said a source.
Political obstacles to a deal have eased since a US spying scandal helped derail a Boeing fighter sale to Brazil in 2013.
Brazilian President Michel Temer, who took office last year, has pushed a market-friendly agenda aimed at privatising utilities and reducing the government’s role in state-run firms.
But Temer has been wrestling with single-digit poll ratings and officials have warned they would veto any full bid.
“The companies are now working through the regulatory issues with the government of Brazil. The defence portfolio would be handled in accordance with the government of Brazil and the golden share and discussions are ongoing,” said the person.
A tie-up would round out Boeing’s commercial portfolio at the lower end where sales have been slow, and echo a venture between Airbus and Canada’s Bombardier on the CSeries jet.
Analysts say October’s deal for Airbus to control the new Canadian project left Embraer looking exposed with its smaller E-Jet, and keenly aware that China may be on the prowl again after seeing its own efforts to buy the CSeries thwarted.