The agreed takeover price is now far too high. In addition, Boeing itself has problems due to the corona crisis. Therefore, the purchase of the Embraer civil aircraft division is at risk.
Boeing and Embraer reached an important milestone in January. The Brazilian antitrust authority Cade unreservedly approved the takeover of the Brazilian airline division by the Americans. All that remained for the two aircraft manufacturers was to wait for the European Union to approve. It should be ready by April 30th.
But in the meantime Boeing and Embraer had to tremble again and wait for the approval of the Brazilian authority. As the Valor Econômico newspaper reports, Brazil’s public prosecutor appealed the takeover in early February. The antitrust authorities had to reassess the sale.
Embraer’s value dropped massively
On Thursday (March 19), the antitrust authorities rejected the federal prosecutor’s doubts and gave it the green light again. While the takeover is legally back on track, the corona crisis is creating new uncertainty. Embraer shares have fallen more than half since February 20 after it became clear that global aviation is facing serious problems due to lung disease.
Embraer’s market value is still $ 1.4 billion after the stock market crash. At $ 4.2 billion, Boeing offers more than three times the value of 80 percent of the civil division. Embraer’s arms and business aviation departments are not included in the deal.
Boeing is also suffering from the corona crisis
Negotiations are now looming between Embraer and Boeing about a cheaper purchase price. The talks could be difficult. Because of the crisis, Boeing is no longer as fluent as it used to be.
After the crisis surrounding the 737 Max and the Corona crisis, Boeing’s liquidity is no longer abundant despite various new loans. The aircraft manufacturer is currently seeking government aid, as was announced on Wednesday.
Reply to Airbus ’acquisition of the C-Series
Boeing responded to Airbus’ takeover of Bombardier’s C-Series aircraft program with the purchase offer for Embraer’s civil aviation division. The regional jet, the Airbus A220, is now 75 percent controlled by the European manufacturer, and is marketed and sold by it. Embraer has a wide range of regional aircraft in its portfolio. In addition, the Brazilians are very far in the computerized, fast development of airplanes. Boeing is also interested in that.
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