Embraer (EMB, São José dos Campos Professor Urbano Ernesto Stumpf) has accused Boeing (BOE, Washington National) of "wrongfully" terminating an agreement wherein the US manufacturer would have taken a controlling 80% stake in a joint venture comprising the Brazilian manufacturer's commercial aircraft and services business. A second joint venture was also planned to develop new markets for the C-390 Millennium medium military airlift and air mobility aircraft.
The deal, which was first announced in July 2018, was valued at USD4.2 billion and would have allowed Boeing to keep pace with Airbus, which acquired Bombardier Aerospace's C-Series line, now rebranded as Airbus Canada, back in 2017.
Boeing said in a statement on Saturday, April 25, that it had terminated the contract given the passing of an April 24 termination date for the Master Transaction Agreement (MTA). Although the deadline could have been extended by either party, Boeing said it had chosen to pull out after Embraer failed to satisfy the necessary conditions.
"Boeing has worked diligently over more than two years to finalize its transaction with Embraer. Over the past several months, we had productive but ultimately unsuccessful negotiations about unsatisfied MTA conditions. We all aimed to resolve those by the initial termination date, but it didn't happen," Marc Allen, president of Embraer Partnership & Group Operations, said. "It is deeply disappointing. But we have reached a point where continued negotiation within the framework of the MTA is not going to resolve the outstanding issues."
In response, Embraer said it "strongly" believed that Boeing had "manufactured" false claims as a pretext to avoid its commitments to close the transaction and pay Embraer the USD4.2 billion purchase price.
"We believe Boeing has engaged in a systematic pattern of delay and repeated violations of the MTA, because of its unwillingness to complete the transaction in light of its own financial condition and B737 MAX and other business and reputational problems," the Brazilians said in a separate statement.
"Embraer will pursue all remedies against Boeing for the damages incurred by Embraer as a result of Boeing's wrongful termination and violation of the MTA."
The planned partnership between Boeing and Embraer had received unconditional approval from all necessary regulatory authorities, with the exception of the European Commission (EC). As it stands, Boeing and Embraer will maintain their existing Master Teaming Agreement, originally signed in 2012 and expanded in 2016, to jointly market and support the C-390 line.
