Boeing and Embraer to establish joint venture
Boeing and Embraer announced they have signed a Memorandum of Understanding to establish a joint venture.
The non-binding agreement proposes the formation of a joint venture comprising the commercial aircraft and services business of Embraer that would strategically align with Boeing's commercial development, production, marketing and lifecycle services operations.
Under the terms of the agreement, Boeing will hold an 80% ownership stake in the joint venture and Embraer will own the remaining 20% stake.
"By forging this strategic partnership, we will be ideally positioned to generate significant value for both companies' customers, employees and shareholders – and for Brazil and the United States," said Dennis Muilenburg, Boeing's Chairman, President and Chief Executive Officer.
"This important partnership clearly aligns with Boeing's long-term strategy of investing in organic growth and returning value to shareholders, complemented by strategic arrangements that enhance and accelerate our growth plans," he added.
"The agreement with Boeing will create the most important strategic partnership in the aerospace industry, strengthening both companies' leadership in the global market."By Paulo Cesar de Souza e Silva, Embraer Chief Executive Officer and President
He continued: "The business combination with Boeing is expected to create a virtuous cycle for the Brazilian aerospace industry, increasing its sales potential, production, creating jobs and income, investments and exports, and in doing so, adding more value to customers, shareholders and employees."
On completion, the JV will be led by Brazil-based management, including a President and Chief Executive Officer. Boeing will have operational and management control of the new company, which will report directly to Muilenburg.
Boeing says the JV will become one of its ‘centres of excellence’ for end-to-end design, manufacturing, and support of commercial passenger aircraft, and will be fully integrated into Boeing's broader production and supply chain.
In addition, both companies will create another joint venture to promote and develop new markets and applications for defence products and services, especially the KC-390 multi-mission aircraft, based on jointly-identified opportunities.
"Joint investments in the global marketing of the KC-390, as well as a series of specific agreements in the fields of engineering, research and development and the supply chain, will enhance mutual benefits and further enhance the competitiveness of Boeing and Embraer," said Nelson Salgado, Embraer's Executive Vice President, Financial and Investor Relations.
To close in 2019
Finalisation of the financial and operational details of the strategic partnership and negotiation of definitive transaction agreements are expected to continue in the coming months. The transaction is expected to close by the end of 2019.