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Embraer and Boeing aircraft manufacturers have taken a new step in the creation of a new joint venture. On Thursday (24), the Brazilian company announced it has signed a series of agreements for the sale of its commercial aviation division to Boeing.
Embraer also indicated that an extraordinary general meeting of shareholders was scheduled for February 26 to approve the transaction.
The agreement was approved earlier this month by the federal government – the government has a "golden share" at Embraer and has a veto over strategic decisions such as the transfer of control of the shares of the company. The agreement will still be subject to the approval of Embraer shareholders.
- The company also announced so n intends to pay $ 1.6 billion in dividends to shareholders in 2019 for the Boeing partnership. Payment is subject to confirmation of certain requirements, such as the results of the business.
In addition to the shareholders, the agreement must be authorized by the regulatory authorities. The process of creating the new company should be completed by the end of the year.
The new company was valued at 5.26 billion US dollars. Boeing, which is North American, will control the company, with an 80% stake, by making a payment of US $ 4.2 billion (equivalent to 16.4 billion rand) to Embraer.
The remaining 20% will come from the Brazilian manufacturer, who can sell his share to North American at any time, through a put option.
- Standard & Poor's threat to downgrade the Embraer rating after the Boeing agreement
It is expected that the partnership will only affect Boeing's earnings per share 2020. The agreement is expected to generate annual synergies of about $ 150 million – before-tax – until the third year of operation.
At the end of the transaction, the joint venture will be led by a team of senior executives in Brazil, including a president and a general manager. Boeing will have operational control and management control of the new company, which will report directly to Dennis Muilenburg, Boeing's President and Chief Executive Officer.
Embraer will have decision-making authority for certain strategic issues, such as the transfer of Brazilian operations. The company expects the result of the operation, net of separation costs, to be about $ 3 billion.
In 2017, Embraer's commercial aviation sector accounted for 57.6% of the company's net sales, or $ 10.7 billion out of a total of 18, $ 7 billion.
The companies also reached an agreement on the terms of a second joint venture to promote and develop new defense markets involving the multi-mission KC-390 aircraft.
According to the partnership, Embraer will be the parent company of this business, with a 51% stake, and Boeing, the remaining 49%. The total value of the transaction has not been declared.
If the partnership is approved in time, Embraer expects the negotiations to be completed by the end of 2019.
The partnership between Boeing and Embraer provides for the joint ventures between Boeing and Embraer to create joint ventures between Boeing and Embraer Boeing and Embraer announced plans to merge their operations in late 2016. It was expected that an agreement would be reached between the two companies. from among them could create a global giant of the aviat ion, which has a strong presence in the long-haul and regional segments, and is able to cope with a similar merger between the biggest competitors, Airbus and Bombardier, who have also joined the group.
and the Brazilian try to consolidate in the same trade two solid operations, one in long distance, another for regional displacements. While Boeing is the leading commercial aircraft manufacturer on long-haul flights, Embraer leads the regional jet market with devices equipped to travel shorter distances.
Embraer was privatized in 1994, at the end of the government of Itamar Franco, for an amount of 154.1 million rand (values of the time), when the government obtained the power to decision with regard to the company.
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