Brazil gov’t to question suspended sale of Embraer to Boeing
Boeing was to control 80%, Embraer 20%, of merged firm
Published in 07/12/2018 - 17:54 By Jonas Valente - Brasília
The Attorney-General’s Office (AGU), the agency aimed at judicially protecting the interests of the Brazilian state, said it will appeal the ruling issued by a federal court in São Paulo which suspended the sale of Embraer to aviation giant Boeing. The interruption was motivated by a citizen suit penned by a number of lawmakers from the Workers Party (PT).
The ongoing negotiation includes the creation of a new company, where Boeing would control 80 percent, and Embraer 20 percent. In the joint venture, Boeing would be tasked with its trade activities, but not the activities linked to national security aircraft and executive jets, which would remain among the Embraer’s responsibilities.
As it stands today, the Brazilian government holds a golden share in Embraer, which grants more control to its owner.
On Thursday (Dec. 6), Federal Judge Victorio Giuzio Neto accepted the request to bring the sale process to a halt. He mentioned the losses stemming from the shrunk power in the hands of the Brazilian government after the merger would strip it of its golden share—thus limiting the government’s share to “whatever is left of Embraer,” which “is not the profitable portion,” the judge argued.
“[Embraer] will be subtly split in two, and part of it [its profitable portion] will be completely handed over to Boeing, be it as majority shareholder of the new company with no golden share, be it on the formation of its board, which will have only one observer, as is the case with its administration—which is then run by Boeing Co. in its entirety,” Giuzio Neto pointed out.
In the case, Embraer challenged the injunction request arguing that the operation should only be considered by the Executive branch, adding that the negotiations would bring no harm to the government and that it would remain as golden share holder.
Embraer’s director’s board further claimed that the sale does not come to the detriment of all of the firm’s interests, and concluded by saying that the transaction would serve to ensure that the company would be “saved” from its financial difficulties.
Translation: Fabrício Ferreira - Edition: Denise Griesinger / Mariana Branco