Embraer and Boeing endorse the terms of the strategic aerospace partnership

(To Boeing)
18/12/18

Embraer and Boeing endorsed the terms of the strategic partnership agreement that would push the positioning of both companies for growth in global aerospace markets.

The terms thus approved define the joint venture, including the commercial aircraft and service operations of Embraer, of which Boeing will hold the 80% of the shares and Embraer will have the remaining 20%. The transaction remains subject to the approval of the Government of Brazil, after which Embraer and Boeing intend to finalize the documents for the final settlement. The closing of the agreement will therefore be subject to regulatory and shareholder approvals and to the customary closing conditions.

Under the terms of the proposed partnership, Boeing will acquire an 80% stake in the joint venture for $ 4,2 billion. The partnership is expected to be neutral towards Boeing's earnings per share in 2020 and with a gradual increase thereafter. Gross cost synergies estimated annually at approximately $ 150 million will be brought forward from the third year of operations.

Once the transaction is completed, the joint venture in commercial aviation will be managed by Brazil-based management, including a president and a CEO. Boeing will have operational and management control of the new company, which will report directly to Dennis Muilenburg, Boeing chairman, president and chief executive officer. Embraer will retain the contractual consent for some strategic decisions, such as the transfer of operations from Brazil.

"Boeing and Embraer know each other very well thanks to over twenty years of collaboration and mutual respect and the value we attach to this partnership have increased since we announced our joint effort at the start of this year," commented Dennis Muilenburg , Boeing chairman, president and chief executive officer.

"We are sure that this partnership will give great value to Brazil and to the entire Brazilian aerospace industry. This alliance will strengthen both companies in the global market and is aligned with our long-term sustainable growth strategy, "said Paulo Cesar de Souza and Silva, Embraer president and chief executive officer.

Companies have also accepted terms for another joint venture to promote and develop new markets for the multi-mission KC-390 medium airlift. According to the terms, Embraer will have 51% of the shares of the joint venture while Boeing the remaining 49%. The transaction is subject to the approval of the Brazilian Government, to the validation by the Board of Directors of Embraer and to its authorization to execute the documents for the definitive transaction. Given that approvals arrive in a timely manner, the transaction will be closed in the 2019.