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.