Boeing, the biggest U.S. planemaker, will work with Brazil’s Embraer to promote sales of military aircraft as part of two joint ventures that follow months of talks on a potential tie-up.
The first project for the combined defense unit will be a joint global marketing effort for the KC-390 twin-engine military jet that Brazil-based Embraer is currently developing. The two companies had previously agreed to work together on promoting the aircraft.
“Joint investments in the global marketing of the KC-390, as well as a series of specific agreements in the fields of engineering, research and development and the supply chain, will enhance mutual benefits and further enhance the competitiveness of Boeing and Embraer,” Nelson Salgado, Embraer’s executive vice president of investor relations, said in a statement.
Sales of Chicago-based Boeing’s defense and security products rose 5 percent in 2017 to $5.5 billion. The company won a $6.2 billion contract in December through the U.S. Air Force to provide Qatar with 36 of its twin-engine F-15 fighter jets.
The two companies also announced a separate strategic partnership that will give Boeing control over Embraer’s commercial aircraft business. Under the terms of the pact, Boeing will take an 80 percent stake in the operation valued at $3.8 billion.
“We will be ideally positioned to generate significant value for both companies’ customers, employees and shareholders — and for Brazil and the United States,” Boeing Chief Executive Officer Dennis Muilenburg said in a statement.
A Boeing spokesman declined to provide information on the ownership structure of the defense partnership.
As part of the new pacts, Boeing and Embraer will share “best practices in manufacturing and across development programs,” the companies said. Leadership for the commercial aviation partnership will be based in Brazil, whose government holds a controlling share in Embraer and previously said it wouldn’t allow Boeing to acquire the company outright.
The two firms expect the transaction to close by the end of 2019, pending approval from shareholders and the Brazilian government.
Embraer paid $107 million in 2016 to settle Justice Department claims that the company bribed government officials in the Dominican Republic, Saudi Arabia and Mozambique.
