Brazil defense chief: Boeing, Embraer nearing ‘marriage’

Boeing and Embraer are likely to reach a deal after months of talks, Brazil’s new defense chief said, opening the door to the second alliance between major planemakers in six months.

Negotiators “are getting closer” to an agreement, Defense Minister Joaquim Silva e Luna said in an interview Tuesday at a security trade show in Sao Paulo.

“I would say, in short, this will end in marriage,” said Silva e Luna, who was appointed six weeks ago.

The comments marked a change of tone at the defense ministry, which has been cautious about a deal because of Embraer’s role as a leading Brazilian innovator and a crucial supplier of military planes. On the commercial side, a tie-up with Boeing would extend an industry shift that began in October when Airbus agreed to take control of Bombardier’s C Series jet — a competitor to the Embraer E2 planes debuting this year.

Embraer rose 4.6 percent to 21.96 reais at 12:05 p.m. in Sao Paulo, jumping after Bloomberg News reported the minister’s comments. Boeing climbed 3.6 percent to $334.14. The companies declined to comment.

Silva e Luna said he wasn’t sure what form a transaction between Embraer and Chicago-based Boeing would take.

“Don’t ask me which kind of marriage, if it is with total sharing of assets, with partial sharing of assets or with separation of assets,” he said.

One option under discussion is a venture that would include commercial jets instead of an outright acquisition, Bloomberg reported in February. But a deal would potentially go beyond commercial planes, Silva e Luna said, citing an opportunity for Brazil to get help from Boeing in selling Embraer’s KC-390 military-transport aircraft.