MercoPress. South Atlantic News Agency

Brazilian judge halts Embraer-Boeing alliance yet again

Embraer would get only 20% of the deal. The judge spoke of a “brutal asymmetry.”

A Brazilian judge Thursday blocked yet again the merger of the commercial division of Embraer with Boeing, despite a joint announcement to the contrary a few days ago.

 

Sao Paulo Federal Judge Víctor Giuizo Neto based his ruling in the “brutal asymmetry” in the shareholding structure of this business, which “prevents it from being carried out without compromising the survival of national interests.”

Therefore, the magistrate granted an injunction suspending the agreement for the sale of Embraer's commercial air carrier to Boeing, in response to a request by the unions of metalworkers.

Earlier this month, Judge Neto, had already interrupted the operation by granting an injunction favourable to a lawsuit filed by deputies from the Labourers' Party (PT).

That injunction was revoked four days later by the Regional Federal Court of the 3rd Region (TRF3), at the request from the Federal Attorney General's Office (AGU).

Thursday's injunction was a response to a case filed by the Metalworkers' Union of São José dos Campos, a city in São Paulo that houses one of the main production centers of Embraer in the country, and the National Confederation of Metalworkers.

According to the agreement between the companies, Boeing would obtain 80% of the new joint venture eorth 4.2 billion US dollars and Embraer only 20%.

Embraer has announced it will take all the necessary legal steps to achieve the agreement.

Although pre-approved by the companies, the agreement still requires final validation by the Brazilian government, which could still use its “golden share” veto prerrogative within Embraer.

The Embraer-Boeing union for the regional aircraft market is a direct response to the Bombardier-Airbus alliance, which took place in July.