RIO DE JANEIRO, BRAZIL – The directors of the Brazilian aircraft manufacturer Embraer met on Friday, April 24th, to discuss whether the merger of its regional commercial aircraft division with the American aircraft manufacturer Boeing would materialize.
Neither company has fulfilled the conditions precedent for closing the deal – announced in July 2018 – within the deadline set in the contract, which expired yesterday. Both parties are entitled to rescind the deal and have already alerted each other of the fact. When they met, the companies valued the Brazilian company’s regional jet business at US$4.75 billion.
British newspaper Financial Times published on its website earlier yesterday that the merger is in jeopardy. When contacted, Embraer made no comments on the matter.
The deal involved two steps. In one of them, Boeing would purchase 80 percent of Embraer’s commercial jet manufacturing operation. In the other, the companies would form a joint venture to manufacture the KC-390 military aircraft. As part of the deal, the Brazilian company had committed to pay R$1.6 billion in dividends to its investors.
Embraer shares dropped 10.7 percent on the Brazilian B3 stock market yesterday, pushing Embraer’s market value down to R$6.8 billion, from R$12.6 billion in late February.
Source: Exame