Brazilian judge questions national interest in the merger deal

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Sao Paulo - On December 20, the Brazilian judge published another directive, which blocks the sale of 80 percent share of the Brazilian aircraft manufacturer to Boeing.

The sale of Embraer’s commercial aircraft division to Boeing has been stopped again by the Brazilian court as the two companies neared completing the transaction.

The same judge made a similar decision earlier this month, but it had been removed last week just before the two companies declared that they agreed to all terms and conditions. The second injunction came as an acknowledgment to an objection filed by the union acting on behalf of Embraer workers.

Embraer said that it would take all necessary judicial measures to overturn the injunction while Boeing declined to comment.

Four left-wing federal parliament members also challenged the proposed merger and made the previous injunction to come into effect. The labor ministry of Brazil also investigates whether the merger could cause job losses.

The agreement is subject to the approval of the Brazilian government since it holds a so-called “golden share” in the Brazilian aerospace company that gives it the right to veto the deal between two companies.

With this latest decision, the judge quests, whether the proposed merger would actually worth something for Embraer.

The brutal asymmetry in the shareholder structure of this venture prevents it from being carried out without compromising the survival of national interests,
noted Judge Victor Giuizo Neto.