Boeing Offers Defense Safeguards to Win Embraer Control

Boeing Co. is seeking control of Embraer SA while offering the Brazilian government safeguards concerning the company’s defense unit, people familiar with the matter said.

The U.S. planemaker is arguing that deals it has made in Australia and the U.K. show that it can operate defense businesses without compromising military plans, said the people, who asked not to be named because the talks are private. Brazil, which signaled opposition to an acquisition last month, is now suggesting it has some flexibility on the control issue, the people said.

Representatives from both companies and Brazil’s government are exploring defense protections that would still give Boeing full access to Embraer’s product lineup. Boeing is also pledging to retain the Embraer brand while enlisting the Brazilian company’s engineers on programs such as the potential development of a jetliner known as the “new mid-market airplane,” said the people.

The government has no problem selling the Brazilian state’s stake in Embraer but is unwilling to give up its “golden share,” said a presidential aide who is familiar with the talks. The golden share gives the government veto power over a change in control at Embraer as well as major strategic decisions about the company’s defense operations. (end of excerpt)

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