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Boeing Will Pay $4.2 Billion to Embraer to Use Its Aviation Area

Jordan
Major
Updated: 13 Apr, 2020
2 mins read

The latest reports reveal that the General Superintendence of Cade has approved an agreement between the American Boeing (BA) and the Brazilian Embraer companies. The Administrative Council for Economic Defense approved that partnership without any restrictions.

Alexandre Cordeiro Macedo, Cade’s superintendent-general, gave the endorsement of this agreement on January 27. Since this operation is not restricted, the companies will not need to implement various measures like selling assets to competitors.

Theoretically, this approval is final. However, it can still be contested, as explained by the Cade’s regulations. Any of the board members are allowed to contest the approval, but they must do so within 15 days. In such a case, he will go to court for deliberation in a collegiate body.

According to its technical opinions, the municipality said that these companies do not compete for the same markets. Hence, there is no existing risk of competitive challenges arising from this acquisition.

Corporate Movements

This agreement comprises of two corporate movements. In one of these movements, Boeing will get 80% of Embraer’s commercial aviation area. That movement will be known as “Boeing Brasil – Commercial.” On the other hand, the Brazilian company will have 20% of this division. It will be responsible for producing, developing, and selling airplanes that have up to 146 seats.

Boeing is set to pay US $ 4.2 billion to the Brazilian company for the deal to go through, as highlighted in the Embraer’s market announcements.

In the other corporate movement, Boeing will have 49% of EB Defense. The company will be created jointly with Embraer, which will own 51%. EB Defense will be created for activities focused on the KC-390, defense, and security aircraft.

The two companies will do the final assembly of the aircraft model in a facility based in the US. They will then sell the planes worldwide, offering after-sales services like repair, maintenance, and overhaul.

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Jordan Major
Author

Jordan is an investor and market analyst. He's passionate about stocks, ETFs, blockchain, and digital assets. At Finbold.com, he delves into the technicalities to obtain future trends for new market traders and gives insights into user-friendly platforms for beginners.

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