BY Richard Summerfield
Boeing Co announced it has abandoned a deal to buy 80 percent of the commercial airline business of Embraer, saying the Brazilian company had failed to satisfy necessary conditions of the agreement.
On Saturday, Boeing terminated its Master Transaction Agreement (MTA) with Embraer. Under the terms of the agreement, Boeing had an option to terminate the agreement until 24 April, subject to extension by either party if certain conditions were met. Boeing did not disclose what the unmet conditions were and declined to comment on the specifics. The company will pay a termination fee of $75m to Embraer.
In response to the termination, Embraer said Boeing was making false claims to back out of the transaction due to its “own financial condition and 737 Max and other business and reputational problems”. Embraer also said that it would “pursue all remedies”.
“Boeing has worked diligently over more than two years to finalise its transaction with Embraer,” said Marc Allen, president of Embraer Partnership & Group Operations. “Over the past several months, we had productive but ultimately unsuccessful negotiations about unsatisfied MTA conditions. It is deeply disappointing. But we have reached a point where continued negotiation within the framework of the MTA is not going to resolve the outstanding issues.”
In 2018, Boeing and Embraer said they expected to close the deal by late 2019, pending regulatory approval. The deal faced an antitrust probe from the European Union. Boeing said that all regulatory authorities had approved the deal, except for the European Commission.
For Boeing, the deal a would have strengthened its position in the smaller jet market, adding the E-Jet-E2 to its portfolio.
Going forward, the two companies have confirmed that they will maintain their existing MTA, originally signed in 2012 and expanded in 2016, to jointly market and support the C-390 Millennium military aircraft.
News: Boeing Backs Out of $4.2 Billion Embraer Joint Venture Deal