SAO PAULO – Boeing is set to take over the Brazilian company Embraer’s commercial business in a deal announced Thursday, extending the US plane maker’s reach into the market for smaller passenger jets.
Under the agreement, Boeing will take control of Embraer’s commercial airplane and services businesses. The Chicago-based plane maker will have an 80-percent ownership stake, and Embraer will own the remaining 20 percent in what was described as a joint venture.
The deal valued Embraer’s commercial-aircraft operations at $4.75 billion.
Embraer’s Brazil-based management will lead the proposed venture, though Boeing would have operational and management control of the new company. Management would be expected to report directly to Boeing’s Chief Executive Dennis Muilenberg.
The Wall Street Journal reported in Dec. that Boeing and Embraer were in takeover talks. The companies had been working to overcome the Brazilian government’s resistance to the deal, centering in large part on Embraer’s defense business.
The proposed venture is expected to create about $150 million in annual pre-tax cost savings for Boeing by its third year, the company said.