Boeing to take over Embraer unit

SAO PAULO/PARIS: Boeing Co struck a deal for a controlling stake in the commercial aircraft arm of Brazilian planemaker Embraer SA under a new $4.75 billion joint venture, the firms said on Thursday, reshaping a global passenger jet duopoly.

The new company, encompassing Embraer’s airliner business, thrusts Boeing into the lower end of the market, giving stiffer competition to the CSeries jets designed by Canada’s Bombardier Inc and backed by European rival Airbus SE.

The memorandum of understanding signed by Boeing and Embraer values the Brazilians’ commercial aircraft operations, the world’s third-largest, at $4.75 billion and Boeing’s planned 80-percent stake in the venture at $3.8 billion.

The Boeing-Embraer alliance, following on the heels of the Airbus-Bombardier tie-up announced last year, represents the biggest realignment in the global aerospace market in decades, strengthening established Western planemakers against newcomers from China, Russia and Japan, analysts say.

Chief Executive Paulo Cesar Silva told employees in a note reviewed by Reuters that consolidation in the aerospace supply chain had also forced Embraer’s hand.

“This has been happening with both our suppliers and our clients. They have started to organize in big blocs, making it harder for companies of Embraer’s size to negotiate,” he said.