Boeing and Embraer are reportedly in talks for a possible acquisition.
Aircraft manufacturer, Boeing, is considering partnering up with Brazilian aerospace conglomerate Embraer. The nature of the deal has yet to be specified as it could be either a majority stake purchase, a joint partnership, or a full-blown acquisition. Whichever road they would choose to take, a potential deal between the two aerospace giants will expand Boeing’s reach into the smaller jet market.
According to an anonymous source, the options for the deal include a joint venture that would allow the companies to sell their commercial jet lineups to each other’s clients as well as negotiate better deals with suppliers.
A Boeing/ Embraer partnership was months in the making considering that Boeing’s rival, Airbus, announced in mid-October that would buy a majority stake in Canada’s mid-size jet, Bombardier. It is known that Bombardier is Embraer’s direct rival in the aircraft manufacturing industry.
The two giants have cooperated on several projects in the past, making their courtship all the more logical. Embraer and Boeing are currently working hard on a new mid-size military cargo plane called the KC-130 which Embraer is developing. The KC-130 will replace the Lockheed C-130 military cargo plane. They also worked together on designing a new 150-175-seat commercial jet that has the potential to replace larger versions of the Boeing 737.
Boeing officials have stated that they are ready to pay whatever sum of money for Embraer’s jet line-up, production capacity, expertise, or other available assets.
Embraer’s market value was around $3.7 billion on Thursday morning but rose during the day to a whopping $4.7 billion amid the Boeing rumors.
The potential partnership, however, won’t be easy to accomplish. Embraer was launched by the Brazilian government in 1969 as a means of establishing a national aerospace manufacturing industry. The aerospace conglomerate was then privatized in 1969. In other words, the government has a say in whatever deal Embraer is likely to make.
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