Embraer, Boeing Approve Terms Of Commercial Aviation JV - Quick Facts

(RTTNews) - Embraer (ERJ) and Boeing (BA) have approved to the terms of a joint venture comprising the commercial aircraft and services operations of Embraer, in which Boeing will hold an 80 percent ownership stake and Embraer will hold the remaining 20 percent. Boeing will acquire the stake for $4.2 billion. Boeing will have operational and management control of the new company. Embraer will retain consent rights for certain strategic decisions, such as transfer of operations from Brazil. The transaction remains subject to approval by the Government of Brazil, after which Embraer and Boeing intend to execute definitive transaction documents.

The partnership is expected to be neutral to Boeing's earnings per share in 2020 and accretive thereafter. Estimated annual pre-tax cost synergies of approximately $150 million are anticipated by the third year of operations.

The companies have also agreed to the terms of another joint venture to promote and develop new markets for the multi-mission medium airlift KC-390. Embraer will own a 51 percent stake in the joint venture, with Boeing owning the remaining 49 percent.