Boeing Walks Away From Embraer Deal
25 Aprile 2020 - 6:04PM
Dow Jones News
By Doug Cameron
Boeing Co. said Saturday it had dropped plans to take control of
the jetliner business of Brazil's Embraer SA, saving around $4
billion in much-needed cash but adding further uncertainty to its
own product strategy.
The U.S. aerospace giant said the companies failed to agree to
final terms by the initial termination date and opted to walk away
from the two planned joint ventures announced in 2018, which had
already been delayed by some competition regulators.
Boeing had pursued Embraer to acquire access to smaller
jetliners seating around 100 passengers and engineering expertise,
but the Brazilian company's market value has fallen by two-thirds
since the start of the year as the coronavirus upended air travel
and led to the grounding of much of the global airline fleet.
The companies didn't detail what conditions weren't met. Boeing
doesn't expect to have to pay a break fee -- which varied from $75
million to $100 million in the original contract -- according to
people familiar with the situation.
"We all aimed to resolve those by the initial termination date,
but it didn't happen," said Marc Allen, who headed Boeing's team on
Embraer integration.
Embraer didn't immediately respond to a request for comment.
Boeing had agreed to pay $4.2 billion in cash for an 80% stake
in Embraer's commercial business, which focused on small regional
jetliners, as well as a 49% stake in a unit producing a new
military cargo jet. Boeing said it planned to proceed with the
defense deal.
The U.S. company last year raised funds for a deal it had hoped
to close by the end of 2019, only for European antitrust regulators
to voice objections. Their probe wasn't due to conclude until
August.
Boeing had redirected the funds from last year's bond issue and
has been raising more funding to address the liquidity squeeze from
the grounding of the 737 MAX and the collapse in air travel, which
has left airlines unable or unwilling to take new aircraft.
Rival Airbus SE moved into the small jetliner business by
acquiring an aircraft program from Canada's Bombardier Inc.
Boeing's aircraft development program had already been derailed
by the prolonged grounding of the MAX, following two fatal
accidents. Boeing also shelved plans for a new midsize jet to focus
on returning the MAX to commercial service.
Write to Doug Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
April 25, 2020 11:49 ET (15:49 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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