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Boeing, Embraer confirm merger talks; no confirmation of deal

A merger between the two companies would build on their existing alliance on the KC-39 military plane and would permit the much-bigger Boeing

PTI/AFP  |  New York 

Photo: Reuters
Photo: Reuters

aerospace giant and Brazil's said they were in talks on a "potential combination" but cautioned there was no guarantee of a deal.

The talks ignited shares of the Brazilian company, which makes commercial, military and executive jets, despite immediate signs of opposition to the transaction in

Any deal would need to be approved by the Brazilian government.

A merger between the two would build on their existing alliance on the and would permit the much-bigger to fill a gap in its fleet with regional single-aisle planes.

A transaction also would reboot an alliance between archrival and Canada's Bombardier to build smaller planes.

The Wall Street Journal first reported the Boeing-talks earlier Thursday, citing unnamed sources.

The report said the parties discussed a deal that would see pay a "relatively large premium" for Embraer, but that talks are on hold as the two sides await word on the Brazilian government's view of the deal.

US-traded shares of shot up following the report, finishing at $24.42, up 22.1 per cent. But fell 1.0 per cent to $ 295.03.

However, the Folha de Sao Paulo newspaper reported that already ruled out a takeover of the Embraer, one of Brazil's flagship

"will never be sold under my government," he was quoted as saying at a meeting with the defense minister and head of the air force.

Brazilian officials were reported to have been taken by surprise by the Wall Street Journal story on the merger talks.

was formed by the Brazilian government in 1969 and privatised in 1994 in a process that granted the Brasilia "golden shares" with some veto rights.

The union at Embraer's Sao Jose dos Campos plant also immediately opposed the deal, saying it would risk the jobs of the 16,000 workers employed in

"The possible purchase of by .. is rejected," the Steelworkers Trade Union of Sao Jose dos Campos and Region said in a statement.

"As a representative of the workers, the steelworkers' union reaffirms its position in favor of a veto over the sale of "

in 2016 notched $ 6.2 billion in revenues, while had $ 94.6 billion.

The merger talks come two months after signed an agreement to take a majority stake in production of narrow- body planes made by Bombardier. Those planes are at the center of an ongoing trade dispute with sparked by a complaint against Bombardier.

The Commerce Department yesterday confirmed nearly 300 per cent tariffs on Bombardier's C-series aircraft. The decision is subject to final approval by the International Trade Commission, a quasi-judicial agency, which is due February 1, though it rarely differs from Commerce.

First Published: Fri, December 22 2017. 07:00 IST