Embraer/Boeing marriage receives the blessing from Brazil's government

An Embraer E175 jet lands at Seattle Tacoma International

An Embraer E175 jet lands at Seattle Tacoma International

"Embraer and Boeing welcome the approval by the Brazilian government of their strategic partnership, which will allow both companies to accelerate growth in the global aerospace markets", the release says.

Boeing and Embraer believe the joint venture has the potential to offer a commercial aircraft portfolio ranging from 70 seats to more than 450 seats. This JV will be 80%-owned by Boeing, for which the USA group will be paying $4.2-billion (reportedly some 10% higher than its original offer), and 20% by Embraer. The company also produces corporate, military, agricultural aircraft.

It will pit Embraer's E-Jet family against the A220s in regional and medium-haul markets. The Brazilian government holds a "golden share" in the originally State-owned Embraer, giving it power of veto over mergers, take-overs, and any other major changes within the company. The next one is to have the agreement ratified by the Board of Directors of Embraer, then it will be the time to prepare the definitive documents of the transaction.

In a joint statement, both companies said the deal conclusion will now be subject to shareholder and regulatory approvals.

"Assuming the approvals are received in a timely manner, the transaction is meant to close by the end of 2019", Boeing said in a statement.

The joint venture would be led by Brazil-based management, including its own president and CEO.

Boeing said last month the partnership was expected to be neutral to its earnings per share in 2020 and accretive thereafter. Embraer would keep consent rights for some decisions, such as the transfer of operations from Brazil. In addition, the companies agreed to create another joint venture for the promotion and launch of the Embraer KC-390 medium-range aircraft.