Boeing is forming a $4.75 billion venture with long-time industrial partner Embraer, a move that will bolster its arsenal in the newest battlefront with Airbus: the market for smaller jetliners.
Under a preliminary deal, Boeing will own 80 percent of a partnership controlling Embraer’s commercial airplane and services businesses while the Brazilian manufacturer holds 20 percent, the companies said in a statement Thursday. The tie-up bolsters the duopoly held by Boeing and Airbus as competitive threats emerge from rivals in Russia, Japan and China.
By adding Embraer’s E-Jet family to its portfolio, Boeing will expand its manufacturing base abroad while extending its reach into the market for 100-seat planes. While the two companies have discussed combining for more than a decade, the talks gained urgency in recent months as Airbus prepared to take control of the C Series — the advanced jetliner that has drained billions of dollars from Bombardier Inc. Airbus is set to detail its plans for the Canadian jet family on July 10, days before a major aviation trade show in Farnborough, England.
“For Embraer, it means that we will have better access to markets with Boeing,” Paulo Cesar de Souza e Silva, Embraer’s chief executive officer, said on a conference call. “Boeing also values a lot the way that Embraer designs, develops and engineers aircraft.”
Boeing will pay $3.8 billion for its stake in the venture — a valuation that prompted Embraer investors to look for the exits. The Brazilian company plunged 14 percent to 23.07 reais at 1:03 p.m. in Sao Paulo, after falling as much as 16 percent for the biggest intraday decline since the days following the Sept. 11 terrorist attacks. Embraer had surged 35 percent this year through Wednesday on anticipation of the deal.
“The valuation was lower than we expected, but