Boeing is discussing a potential merger with Brazilian aircraft manufacturer Embraer following a Wall Street Journal report. The new comes only 2 months after Boeing’s key rival, Airbus, bought a majority stake in Bombardier’s C-Series programme, the E-Jets direct competitor.
The talks have centered on a takeover, with Boeing offering Embraer a substantial premium over its $3.7 billion market value, the Wall Street Journal said on Thursday. Any tie-up would need to be approved by the Brazilian government, the companies said in a statement.
Last night Embraer’s shares soared around 30% after the joint statement was released in Sao Paulo. Boeing would get a bigger footprint in the regional jet industry. That is something that rival Airbus is already attempting to do after buying a large stake in the C-Series programme a couple of months ago. Embraer is, however, highly prized by the Brazilian government and according to the Wall Street Journal has the final say over any sale. The Brazilian government is already signalling opposition to a takeover, according to the newspaper Folha de Sao Paulo. President Michel Temer expressed that he won’t allow control of Embraer to change hands, Embraer has been a source of national pride since its birth in 1969. However, there is no guarantee that anything will amount from these discussions, both manufacturers refused to comment further on the discussions.
If a takeover emerged, Boeing would have a new presence in the regional market, with control over the E-Jet programme, which has already been bought into by many major airlines. This, furthermore, allows Boeing to directly fight back against the C-Series project which has been the centre of many trade disputes this year.
The US Department of Commerce sided with Boeing by upholding a proposed hefty tariff on C-Series aircraft imported into the USA. However, the introduction of the tariff is subject to a final decision by the US International Trade Commission, expected around February 2018. Brazil themselves gave also decided to take action against the C-Series programme on the grounds of unfair state subsidies and a World Trade Organization panel is to investigate these complaints further.