Boeing shares ended just higher in the US Thursday, after the plane maker announced it will buy a controlling stake in the commercial arm of Brazilian business, Embraer. The deal will see Boeing pay $3.8 billion for 80% of the unit.
Boeing shares ended the US Thursday trading session 0.08% higher at $333.18. The stock has been moving broadly lower in recent weeks.
Boeing accelerating growth with deal
This new investment will give Boeing a bigger slice of the smaller passenger plane maker sector of the industry. That’s something that will put it on a more level pegging with Airbus who already has a partnership with Canadian plane maker, Bombardier.
“By forging this strategic partnership, we will be ideally positioned to generate significant value for both companies' customers, employees and shareholders – and for Brazil and the United States,” said Dennis Muilenburg, Boeing's Chairman, President and Chief Executive Officer.
“This important partnership clearly aligns with Boeing's long-term strategy of investing in organic growth and returning value to shareholders, complemented by strategic arrangements that enhance and accelerate our growth plans,” he added.
Meanwhile, Embraer was also positive on the deal:
“The agreement with Boeing will create the most important strategic partnership in the aerospace industry, strengthening both companies' leadership in the global market," said Paulo Cesar de Souza e Silva, Embraer Chief Executive Officer and President.
Brazil-based team to lead new JV
Other details of the deal show that once it is complete, the new joint venture will be led by a Brazil-based team. That team will report to Boeing who will have ultimate operational and managerial control.
The newly configured business will then begin offering a comprehensive commercial plane portfolio, Boeing said. Those plans will range from aircrafts with 70 seats to over 450 seats for a global customer base.
“The transaction will have no impact on Boeing and Embraer financial guidance for 2018 or Boeing's cash deployment strategy and commitment to returning approximately 100 percent of free cash flow to shareholders,” Boeing said.