Embraer's Shares Rise 20%

Embraer saw a hike of over 20% after it announced a possible partnership with the U.S. based plane-maker Boeing. The partnership would result in the union of two of the biggest plane-makers in the world.

The deal is likely to be a retaliation to a similar merger announced by Airbus and Bombardier a few months ago. That combined with Bombardier’s recent loss at the U.S. Commerce Department has made this deal the perfect investment for Embraer.

Embraer, which is one of the largest plane-makers in the world, employs over 18,000 people globally. The company was formerly state-run and as such will require explicit permission from the Brazilian government to move ahead with the deal.

The Brazilian government still holds a “golden share” in the company which grants it veto power in several sectors of the company, including change of control.

When asked about the state’s opinion on the deal, Brazilian President Michael Temer said he would be open to the deal but will oppose any sale of the majority stake.

The deal, if it does take place, will result in the creation of a superpower in the plane industry, one that can rival the Airbus-Bombardier merger.

At the time Airbus stated that it would acquire a majority stake in Bombardier’s C-Series jet project, a line of narrow-body planes which are likely to become hot property in the upcoming years.

Bombardier’s C-Series has been a thorn in Boeing’s side for quite a while now. The latter has even taken legal action against Bombardier over the tax exemptions enjoyed by its C-Series.

The U.S. Commerce Department was inclined to agree with Boeing and has now levied a tax of about 300% on Bombardier’s imported products.

The decision, announced this week, has resulted in exceedingly strained relations between the U.S. and Bombardier’s location country, Canada.

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