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The Brazilian antitrust authority has approved the purchase of Embraer by Boeing

03.02.2020
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According to CADE's press release, Brazil's Governing Body for Economic Protection (CADE) on Monday approved a deal to create a joint venture with national aircraft manufacturer Embraer and US aircraft manufacturer Boeing.
According to the regulator, the companies do not compete with each other on the same market, and a deal between them does not pose a risk of competition problems.


This is a two-stage agreement between aircraft manufacturers, in the first phase of which Embraer will gain control over 80% of the assets of Embraer related to the production of medium-haul passenger aircraft. The second part of the agreement involves the creation of a joint venture that will manufacture the military transport aircraft KC-390, with a Brazilian company controlling 51%. Earlier, the cost of the future joint venture was estimated at $ 5.26 billion.


CADE analysts believe that as a result of the transaction, the relationship between Embraer and Boeing will become a strategic partnership. As a result, in their opinion, the national manufacturer will benefit, since the remaining units under its control engaged in military and business aviation will have the opportunity of closer technological and commercial cooperation with Boeing. At the same time, the more investment-intensive niche of commercial aviation, in which one also has to compete with the European Airbus, will be transferred to the area of responsibility of the American company.


Overall, The acquisition is thought to allow Boeing to enter the regional aircraft and business jets market and compete with Bombardier and Airbus.


The European antitrust authorities have not yet approved the Boeing-Embraer deal; their decision must be made before April 30 this year.