A Brazilian appeals court has overturned a December 5 ruling by a federal judge in São Paulo granting an injunction to block Embraer’s board of directors from approving the proposed deal to give Boeing an 80-percent stake in the Brazilian company. The latest ruling, revealed in a December 10 U.S. Securities and Exchange Commission filing by Embraer, grants a request to overturn the injunction by Brazil’s solicitor general, who argued that the original ruling violated Embraer’s right under the country’s constitution to engage in free enterprise, according to Reuters.
Embraer expected to receive approval from the Brazilian government to move forward with its proposed joint venture with Boeing by the end of the year, following consultation between the current government of Michel Temer with the incoming administration of far-right president-elect Jair Bolsonaro. Speaking during the company’s third-quarter earnings call with investment analysts, Embraer CEO Paulo Cesar de Souza e Silva said he expected to present the final agreement to the outgoing administration before it left office.
In a positive signal sent to Boeing and Embraer, the incoming administration has expressed a favorable view of the proposed joint venture. Once the JV receives the blessing of both administrations, the next step involves calling a general assembly. The deal would close after it gains shareholder approval and passes antitrust scrutiny with the applicable authorities, sometime in the second half of 2019, said Silva.
The proposed transaction values Embraer’s commercial aircraft operations at $4.75 billion and contemplates a value of $3.8 billion for Boeing’s 80 percent ownership stake in the joint venture. A joint statement announcing the deal indicated that Boeing would take full operational and management control of the new company, but that a Brazil-based management team, including a president and CEO, will lead the joint venture and report to Boeing CEO Dennis Muilenburg.