Boeing didn't sugarcoat it's words when announcing the end of the planned joint venture with competitor Embraer. The Brazilians had «not satisfied the necessary conditions», said the manufacturer. But Embraer won't accept being blamed for the deal not going through. And it strikes back even harder.
«Embraer believes strongly that Boeing has wrongfully terminated the MTA, that it has manufactured false claims as a pretext to seek to avoid its commitments to close the transaction and pay Embraer the US$4.2 billion purchase price», the Brazilian Company states. According to Embraer, Boeing has engaged in a «systematic pattern of delay and repeated violations of the MTA, because of its unwillingness to complete the transaction in light of its own financial condition and 737 MAX and other business and reputational problems.»
Embraer wants Boeing to pay for damages
The Brazilian aircraft manufacturer goes on to say that it has fully complied with all its obligations under the agreement and has fulfilled all the conditions that had to be met by the deadline of 24 April 2020.
Embraer ensures that it will pursue «all remedies against Boeing for the damages incurred as a result of Boeing's wrongful termination.» The Brazilian company tries to keep a defiant tone. «Our history of over 50 years is lined with many victories but also some difficult moments. All of them were overcome. And that’s exactly what we are going to do again.».
Almost everything was ready
Embraer had invested a great deal of manpower over the past few months in implementing the merger. The staff in São José dos Campos worked to separate the business jet and military sectors from the civil aircraft sector, which was to be brought into a joint venture, which would have been 80 percent owned by Boeing. For a long time now, it was no longer a question of contractual matters, but of very concrete things such as the division of facilities, employees or IT systems.
But the Corona crisis is also causing further financial problems for Boeing, apart from losses generated because of the grounding of its 737 Max. The takeover price, in light of all this, might have been too high. The contract had set a price of 4.2 billion dollars for the 80 percent share in the joint venture. By now, however, the entire Embraer group with all its divisions is only worth 1.07 billion on the stock exchange.
