Boeing and Embraer confirmed the two companies are engaged in discussions regarding a potential combination, the basis of which remains under discussion, on Dec. 21.
According to a statement from Boeing, there is no guarantee a transaction will result from these discussions. It added that Boeing and Embraer do not intend to make any additional comments regarding these discussions.
Any transaction would be subject to the approval of the Brazilian government and regulators, the two companies’ boards and Embraer’s shareholders.
According to a Wall Street Journal report, the talks have centered on a takeover, with Boeing offering Embraer a substantial premium over its $3.7 billion market value. Shares of Embraer surged as much as 25 percent in midday trading after the reports of the possible takeover.
The acquisition would be Boeing’s largest since it bought U.S. rival McDonnell Douglas Corp. in 1997 and would advance a consolidation wave sweeping through the aerospace sector. Boeing would gain an aircraft offering in the 100-seat category to counter a new threat from Airbus SE, which agreed in October to take control of Bombardier Inc.’s C Series program — the target of a trade complaint brought by Boeing.
The Brazilian government is already signaling opposition to a takeover, according to the newspaper Folha de Sao Paulo.
Boeing and Embraer already work on projects including runway safety and alternative jet fuels. Their partnership intensified in recent years to include Boeing’s commitment to joint sales and support of Embraer’s KC-390 military airlifter.
The Boeing Company is an American multinational corporation that designs, manufactures, and sells airplanes, rotorcraft, rockets, and satellites worldwide. The company also provides leasing and product support services.
Boeing is among the largest global aircraft manufacturers and is the second-largest defense contractor in the world based on 2015 revenue. The Boeing Company’s corporate headquarters are located in Chicago.
Boeing is organized into five primary divisions: Boeing Commercial Airplanes (BCA); Boeing Defense, Space & Security (BDS); Engineering, Operations & Technology; Boeing Capital; and Boeing Shared Services Group.
Embraer S.A. is a Brazilian aerospace conglomerate that produces commercial, military, executive and agricultural aircraft and provides aeronautical services. It is headquartered in São José dos Campos, São Paulo State.