Embraer ON (BOV:EMBR3)
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By Doug Cameron
European competition regulators are expected to open an in-depth probe into plans by Boeing Co. to take control of the commercial-jetliner arm of Brazil's Embraer SA in a move that could upset plans to close that deal by the end of the year.
Embraer said in a regulatory filing that the companies had been told of the planned action by the European Commission, which is due to reveal its initial findings on Oct. 4.
The potential investigation puzzled some antitrust lawyers as the Commission approved the purchase by Airbus SE of the CSeries jetliner business of Bombardier Inc, giving the European plane maker the same foothold in the market for smaller jetliners as Boeing hopes to gain via Embraer.
Boeing and Embraer declined to comment on a potential delay to the closing of Boeing's planned $4.2 billion purchase of an 80% stake in Embraer's jetliner business and a 49% stake in a unit producing a new military cargo jet.
However, legal experts said the Commission probe would likely take four to five months, soaking up more resources just as Boeing is dealing with multiple investigations into its 737 MAX following two fatal crashes.
"They're going to ask for much more information," said Jeff Bialos, a mergers and acquisitions attorney at Eversheds Sutherland LLC.
Boeing has already raised funding for the proposed deal through a bond offering, while Embraer shareholders and Brazilian antitrust officials have also given approval. Boeing would owe a $100 million break fee if the transaction is felled by regulators. U.S. antitrust officials raised no objections to the deal.
Embraer, which suffered a one-day strike among manufacturing staff this week, is best known for making regional jets in the 70- to 100-seat range, used heavily on routes that don't warrant larger Boeing or Airbus planes. The new Bombardier CSeries, renamed the A220, expands the Airbus product line with a jet seating up to 140 passengers.
Embraer last week delivered the largest offering from its new E2 jetliner range, which seats 146 passengers.
Write to Doug Cameron at email@example.com
(END) Dow Jones Newswires
September 26, 2019 19:31 ET (23:31 GMT)
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