The Most Annoying Merger of All Time
Boeing is half-way through a complicated dissection of Embraer, a Brazilian aerospace giant that it wants to buy a piece of. The stakes are high, but European regulators are in Boeing’s ear and hoping to stifle its ‘come fly with me’ dream!
The big money in building passenger planes has long gone to investors in Boeing and Airbus. Flying the US and European flags respectively, authorities on both sides of the pond often squabble to give their own companies a leg up. However, in faraway lands, new contenders are growing in might. Underneath strobe lights in Moscow, Irkut hopped from the military to commercial aircraft business with the unveiling of its MC-200. In Beijing, COMAC’s ARJ21 also landed on the scene.
Beefing up for a possible future dogfight with these new rivals, Airbus got its business done early in 2018, buying the jet-making CSeries program of Bombardier. Boeing, on the other hand, targeted Brazilian giant Embraer.
Embraer is a progressive company with a strong culture and seamlessly integrated parts. So, cue Boeing, already a pain in the backside for investors this year, to try and pluck the company’s commercial aviation business out for a merger, separating it from Embraer’s luxury jets and military arm.
To the surprise of no one, European regulators aren’t making life any easier, but a deal still looks imminent. Any downsides to it? Some market players fear Boeing will pay billions for a slice of Embraer without its magic ingredient, seamless integration with a larger whole. Regardless, this is a huge long-term merger and it could be a defining moment for the aerospace sector!