Boeing Co. is in talks about a potential takeover of Brazil’s Embraer SA, the companies said, in a potential blockbuster deal that would give the U.S. plane manufacturer a portfolio of regional jets.
Embraer would get a substantial premium over its $3.7-billion market value, the Wall Street Journal said Thursday. A deal would require approval from the Brazilian government, the companies said in a statement.
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 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.
Embraer’s American Depositary Receipts jumped 18% to $23.50 at 12:22 p.m. EST after advancing as much as 31% for a record intraday gain. Boeing slid less than 1% to $296.05.
A deal would add the largest regional-jet manufacturer to Boeing, already the world’s largest commercial jet maker, while expanding the Chicago-based company’s manufacturing base outside the U.S. for the first time.
Created in 1969 by the Brazilian government and privatized in 1994, Embraer has been held up as a source of national pride and an example of efficiency and innovation in a commodities-driven country, though corruption scandals in the last few years have tainted that image.
Embraer and Boeing are already close partners. They collaborate on several projects at Boeing’s Research and Technology Center in Brazil, inclduing a titanium recycling technique and software to help calculate and reduce airplane noise. Boeing is also Embraer’s commercial and maintenance partner for the KC-390, a military cargo plane still being developed.