28 Jan 2019, Stella Zlatareva, EMIS M&A Team
Boeing meets Brazilian resistance in hopes for upper hand in the lucrative passenger aviation market
The agreement comes in light of a similar takeover by Europe’s Airbus, which a year prior took Canadian Bombardier’s commercial plane division. The latter is among the main competitors of Embraer. The takeover of Embraer’s division would allow Boeing to directly vie with the French major in the regional jet market.
The government could have vetoed the venture through its golden share despite Embraer being a public company listed in Brazil. However, an injunction delivered by a federal court in December 2018 was later reversed as it “would hurt the economy”. The legal challenge was also political – the injunction was submitted by trade union-backed lawmakers from the Workers’ party. Labour unions vocally opposed the deal for Embraer’s commercial jet operations. And unsurprisingly so, given the company’s profound ties to the Brazilian defence industry and the fact that it is considered of strategic importance to the nation.
One thing is clear, the recent M&A moves in aviation represent a major shake-up in the international aerospace industry and mark the beginning of a clash for control of the passenger jet market.
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