Boeing’s Pursuit of Beloved Brand in Brazil Hits Political Headwind
- 6 years ago
Boeing’s Pursuit of Beloved Brand in Brazil Hits Political Headwind
But the talks, which moved into high gear late last year, are advancing at a politically fraught time in Brazil, and the Brazilian government — which owns a so-called golden share
that gives it veto power over any change in ownership at Embraer — could derail a deal the two companies are said to be racing to complete.
The Brazilian government, which appeared to have been caught off guard when news of the talks emerged in late December, has responded warily, and coolly, to the idea of ceding to a foreign company significant control of an enterprise
that is a source of national pride and a pillar of Brazil’s defense industry.
Boeing, backed by the Trump administration, sought to undermine Bombardier even before Airbus snapped up a 50.01 percent stake in the CSeries program, by arguing before the United States Trade Commission
that the Canadian company had taken advantage of Canadian subsidies to sell planes to Delta Air Lines below market cost.
Officials from both companies and the Brazilian government said Boeing had sought
to make its initial takeover proposal more palatable by offering concessions.
The possible concessions would include allowing the Brazilian government to retain veto rights over strategic decisions
and military programs, and creating a distinct subsidiary with firewalls that would safeguard defense projects and technology.
President Michel Temer told journalists in December
that foreign participation could be welcome up to a point, but that a takeover was out of the question: "There isn’t the slightest consideration of selling control to another company," he said.
But the talks, which moved into high gear late last year, are advancing at a politically fraught time in Brazil, and the Brazilian government — which owns a so-called golden share
that gives it veto power over any change in ownership at Embraer — could derail a deal the two companies are said to be racing to complete.
The Brazilian government, which appeared to have been caught off guard when news of the talks emerged in late December, has responded warily, and coolly, to the idea of ceding to a foreign company significant control of an enterprise
that is a source of national pride and a pillar of Brazil’s defense industry.
Boeing, backed by the Trump administration, sought to undermine Bombardier even before Airbus snapped up a 50.01 percent stake in the CSeries program, by arguing before the United States Trade Commission
that the Canadian company had taken advantage of Canadian subsidies to sell planes to Delta Air Lines below market cost.
Officials from both companies and the Brazilian government said Boeing had sought
to make its initial takeover proposal more palatable by offering concessions.
The possible concessions would include allowing the Brazilian government to retain veto rights over strategic decisions
and military programs, and creating a distinct subsidiary with firewalls that would safeguard defense projects and technology.
President Michel Temer told journalists in December
that foreign participation could be welcome up to a point, but that a takeover was out of the question: "There isn’t the slightest consideration of selling control to another company," he said.