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Boeing boosts value for Embraer's commercial business to US$5.26b

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Brazil's Embraer SA said on Monday it has finalized terms of a proposed deal to sell 80 per cent of its commercial aviation business to Boeing Co , now valuing the division at US$5.26 billion.

[SAO PAULO] Brazil's Embraer SA said on Monday it has finalized terms of a proposed deal to sell 80 per cent of its commercial aviation business to Boeing Co , now valuing the division at US$5.26 billion.

The new valuation is 11 per cent more than the US$4.75 billion offered when the deal involving Embraer's commercial division was originally announced in July.

Embraer expects it will receive US$3 billion after accounting for closing costs.

It is unclear whether any part of the difference relates to debt. Embraer had some US$4 billion in total debt, according to its most recent financial statements at the end of September.

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Embraer's board Monday moved to present the deal for approval to the Brazilian government, which holds veto power over important business decisions at the plane maker. But a source close to the negotiations said they were optimistic about the prospects.

It was unclear how long the government could take to make a decision, but President-elect Jair Bolsonaro and his aides have spoken favorably of a Boeing-Embraer deal. Bolsonaro begins his presidency on Jan 1.

The deal is also subject to shareholder approvals at both Embraer and Boeing.

Separately, Embraer announced details of a joint venture with Boeing intended to promote its signature defense plane, known as the KC-390. Under that partnership, Embraer will have a 51 per cent stake in the operation.

Embraer was up 4.5 per cent in early-morning trading in Sao Paulo.

REUTERS