A Brazilian federal court threw out a provisional injunction delivered last week that prevented the government there from deciding on the proposed Boeing Co. merger with Embraer SA’s commercial aircraft operations. The earlier ruling in favor of a class action brought by a Brazilian labor party essentially halted a deal agreed to in July and in development for over a year.
Boeing has yet to comment on any of the recent developments.
Boeing stands to hold 80% of the proposed joint-venture. The $4.75-billion business would consist of the current Embraer commercial aircraft and services business, which will be headquartered in Brazil but aligned with Boeing Commercial Airplanes’ commercial development, production, marketing and lifecycle services operations. Embraer would hold 20% of this new venture.
The Brazilian solicitor general asked the court to overrule last week’s injunction on the premise that it violated free-enterprise rights of two private companies.
While Embraer is a public company, the Brazilian government holds a "golden share" that allows it to block any transaction that would change majority ownership of the company. Embraer would retain its military aircraft division after the proposed merger.
The government’s consent to sell its shares would allow the two companies to proceed to seek regulatory and shareholder approvals. Executives of both companies have remained confident those approvals would be secured in 2019.
Boeing is seeking to acquire Embraer in order to bolster its own stake in the commercial aircraft mid-market, meaning medium-range jets for 70-150 passengers. The acquisition also would counter rival Airbus’ consolidation of the Bombardier C-Series medium-range product line.