July 2018 Memorandum of Understanding
On July 5, 2018, a Memorandum of Understanding was announced for a strategic partnership: for $3.8 billion Boeing would have an 80% stake in a joint venture with Embraer, which would produce and service Embraer's commercial airliners (the ERJ, E-Jet and the E-Jet E2), a business that at the time was valued at $4.75 billion and offer $150 million worth of corporate synergy opportunities. The joint venture should have $3.5 billion assets against $1.4 billion liabilities, for a $2.1 billion equity value.[19] The price paid by Boeing was seen as very favorable to Embraer compared to the amount paid by Airbus for the CSeries.[20] In March, Boeing named Embraer's John Slattery as CEO of the joint venture and B. Marc Allen, a Boeing executive as president.[21]
On May 23, Boeing announced that the division would be known as "Boeing Brasil–Commercial," dropping the Embraer name, but had not yet decided whether to rebrand the aircraft as Boeing models.[22] The joint venture also confirmed that airliner production would remain at the São José dos Campos factory, to be taken over by Boeing Brasil; while Embraer would move production of the Legacy 450/500 and Praetor 500/600 executive jets to the Gavião Peixoto factory.[23]
The EU antitrust investigation was set to issue findings from its preliminary review on October 4, 2019, and intended to conduct a full investigation thereafter which could last up to five months.[24] By then, Boeing and Embraer were expecting the transaction to close in early 2020.[25] On November 12, 2019, Embraer confirmed the delay until at least March 2020.[26] In January 2020, the partnership was approved by Brazilian authorities, and only the European Commission approval was lacking.[27] By March 2020, the deal was not expected to close before June 23, 2020.[28]
On November 18, 2019, the two companies officially announced a second joint venture known as "Boeing Embraer – Defense" to promote and develop new markets for the C-390 Millennium. Embraer would keep a 51% stake in this proposed joint venture, which would also need to be approved by shareholders and government regulators[29]
Termination
Boeing terminated the planned joint ventures on April 24, 2020, saying that Embraer did not satisfy the conditions established in their agreement.[30] Industry analysts said that the $4.2 billion deal became unbalanced as Embraer's market value fell to less than $1.1 billion as air travel demand dropped as a result of the impact of the 2019–20 coronavirus pandemic on aviation.[31][32] Industry analysts speculated that Boeing may have also cancelled the deal because it had recently been awarded a U.S. government pandemic relief loan, and wanted to avoid making the impression that funds intended to support U.S. jobs were instead used to secure a deal with a Brazilian firm.[33]
Embraer has rejected Boeing's reasons for the termination of the deal and said the company "has manufactured false claims as a pretext to seek to avoid its commitments" because of its financial condition after the 737 MAX groundings and "other business and reputational problems."[34]
