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Changing Skies: Boeing to acquire 80% in Embraer

BEAM Staff
July 9, 2018

Boeing, the US-based aerospace behemoth has confirmed plans to acquire an 80% stake in Embraer's commercial aviation business. The Brazilian manufacturer now says it will retain its business jet division.

As part of the acquisition, a joint venture will be formed between Embraer and Boeing for the commercial aircraft operations, with the US titan valuing the Brazilian company at $4.75 billion. Boeing's market cap now sits at $197 billion, with the stock up 3% since the news of the acquisition, adding to Boeing's market cap more than Embraer's valuation at nearly $6 billion.

The transaction will still have to undergo shareholder and regulatory approval, particularly in Brazil where authorities might not look keen to lose control of one of the largest aerospace manufacturers to a US company. In total, the company generated $5.8 billion in revenue in 2017, $1.5 billion of which, came from its business jet division, which will now stay with Embraer.

iStock / icholakov

Founded in 1969, Embraer was first only a domestic manufacturer controlled by the government. In 1994, the company was privatized to help it avoid bankruptcy, with the Brazilian government retaining golden shares that gave it veto power. The company held its IPO in 2008 on the NYSE. In 2017, it posted a net income of $246.8 million.

Amongst its current business jet lineup is the popular Phenom series in the light jet space, which has been positioned both as efficient from a maintenance standpoint and speed as well as the Legacy series, a strong contender in the midsize and heavy jet space. Its flagship Lineage 1000E though was slow to gain traction in the VVIP space.

Lead Photo iStock / turbo83