Boeing Deal for Embraer Halted by Brazilian Court

By Paul Ausick Updated Jan 11, 2:03PM EST · Published Dec 6, 3:29PM EST

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Boeing Deal for Embraer Halted by Brazilian Court — © Embraer SA

If there’s one thing Boeing Co. (NYSE: BA) didn’t need Thursday it was more bad news. The stock has been pummeled on a report in The Wall Street Journal that the company omitted information on its automated flight-control system from its operations manual. The system is believed to be the cause of the Lion Air crash offshore of Indonesia in late October that killed all 189 people on board.

Meanwhile, in Brazil, Reuters reports that a federal court has granted an injunction requested by four Brazilian legislators associated with the country’s leftist Workers Party forbidding the board of directors of aircraft maker Embraer S.A. (NYSE: ERJ) from completing a deal to create a joint venture between Embraer’s commercial aircraft business and Boeing. Under the terms of the deal struck in July, Boeing will hold an 80% ownership stake in the joint venture and Embraer will own the remaining 20% stake. Boeing’s stake was valued in July at around $3.8 billion.

The kink in the deal comes from the Brazilian government, which owns a stake in the company and a much more important right to approve or reject any major deal involving Embraer, which also produces military aircraft for Brazil and foreign buyers. Boeing would have no stake in the military business.

[nativounit]

The government’s approval has been delayed due to Brazil’s election and the outgoing president, Michel Temer, has said he would leave the decision to the new government that takes office on January 1. President-elect Jair Bolsonaro says he favors the deal with Boeing.

The tie-up between Embraer and Boeing came about as a response to Airbus’s takeover of the small single-aisle CSeries program from Canadian aircraft maker Bombardier. The newly named A220 is a regional jet that carries up to 100 passengers and competes for customers with Embraer’s E190 and E195 jets.

According to Reuters, the court’s decision can be appealed, although neither Boeing nor Embraer replied to requests for comment.

[recirclink id=509527]

[wallst_email_signup]

DISCLOSURE:

Customer must fund their Active Invest account with at least $50 within 45 days of opening the account. Receive a minimum of $15. Probability of member receiving $3,000 is a probability of 0.026% If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Percentages for the $3,000 are subject to decrease. See full terms and conditions.

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA(www.finra.org)/SIPC(www.sipc.org). Advisory services are offered by SoFi Wealth LLC, an SEC-registered investment adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov. Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 30 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Other fees, such as exchange fees, may apply. Please view our fee disclosure to view a full listing of fees. Investing in alternative investments and/or strategies may not be suitable for all investors and involves unique risks, including the risk of loss. An investor should consider their individual circumstances and any investment information, such as a prospectus, prior to investing. Interval Funds are illiquid instruments, the ability to trade on your timeline may be restricted. Brokerage and Active investing products offered through SoFi Securities LLC, Member FINRA(www.finra.org) /SIPC(www.sipc.org). There are limitations with fractional shares to consider before investing. During market hours fractional share orders are transmitted immediately in the order received. There may be system delays from receipt of your order until execution and market conditions may adversely impact execution prices. Outside of market hours orders are received on a not held basis and will be aggregated for each security then executed in the morning trade window of the next business day at market open. Share will be delivered at an average price received for executing the securities through a single batched order. Fractional shares may not be transferred to another firm. Fractional shares will be sold when a transfer or closure request is initiated. Please consider that selling securities is a taxable event. Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire investment Before trading options please review the Characteristics and Risks of Standardized Options Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement This should not be considered a recommendation to participate in IPOs and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation. New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For more information on the allocation process please visit IPO Allocation.

Follow 24/7 Wall St. on Google

About the Author Paul Ausick →

Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.