【Reprint the news from Bloomberg】
Boeing Co. is mulling a “potential combination” with Brazil’s Embraer SA, the companies said, in a blockbuster deal that would expand the U.S. aerospace giant’s reach into the highly competitive market for smaller jets.
The options under discussion include a joint venture that would enable the companies to share supplier savings and cross-sell their largely complementary lineup of commercial jets, said a person familiar with the matter, who asked not to be identified because the talks are private. Such a partnership would stop short of a full takeover, which would risk becoming a lightning rod for Brazilian politicians. Embraer had a market value of $3.7 billion before the shares surged Thursday on news of the talks.
The planemakers provided few details publicly beyond saying that the shape of the tie-up “remains under discussion,” and would require approval by the Brazilian government, regulators and Embraer shareholders. Brazil holds a “golden share” in Embraer that gives it veto power over an acquisition, and, according to local press reports, President Michel Temer is already signaling opposition.
“National pride is an important consideration here that could define the structure of these arrangements,” Robert Spingarn, an aerospace analyst at Credit Suisse Group AG, said in a note to clients Thursday. “Accordingly, we think JVs could be preferable in certain circumstances over outright mergers.”