Boeing Studies Embraer Options After CEO Sees ‘Great Strategic Fit’

Boeing Co. is still working to find the right deal structure to satisfy Embraer SA’s sometimes fractious stakeholders as it pushes ahead with an unusually public courtship of the Brazilian planemaker.

Dennis Muilenburg, Boeing’s chief executive officer, remained upbeat about the talks Wednesday, reeling off benefits such as “highly complementary product lines.” But the politics of the tie-up are complicated in Brazil. The government is split on whether to approve a takeover of the country’s industrial crown jewel, and an upcoming presidential election is likely to add to the tension, Bloomberg News reported this month.

“It’s a great strategic fit,” Muilenburg said on a conference call with analysts after Boeing reported earnings. “We know that the government of Brazil has raised some concerns or issues that we fully respect, and we’re working through the details of potential options.”

Whatever the outcome, Muilenburg said a potential Embraer deal wouldn’t interfere with Boeing’s emphasis on internal growth and handing cash back to shareholders. Last year alone, the U.S. planemaker spent $9.2 billion to buy back 46.1 million shares and directors in December authorized plowing another $18 billion into shares. Embraer has a market value of $4.6 billion.

While Chicago-based Boeing chases strategic targets like Embraer along with companies that would round out its new services business, “our commitment to balanced cash deployment and returning cash to shareholders remains unchanged,” Muilenburg said. “It’s a winning strategy.”

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