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Boeing Terminates ₦1.6 Trillion Deal With Embraer, Faces ₦39b Penalty
US Boeing terminates $4.2 billion (₦1.6 Trillion) deal with Brazilian aircraft maker Embraer.
Boeing faces a $100 million (₦39 billion) termination penalty for scrapping the deal. Embraer would have faced a maximum penalty of $75 million.
Boeing on Saturday announced the termination of its $4.2 billion deal with Brazilian aircraft maker Embraer. According to Boeing, Embraer failed to satisfy the necessary conditions after initially agreeing to pay $4.2 billion to buy 80% of Embraer’s operation in 2019.
Under the terms of the deal, Boeing would own 80% of Embraer’s commercial aircraft operations, while Embraer retained 20% ownership.
The deal would have given Boeing a bigger stake in the market for smaller jets and help the company develop airplanes more cheaply.
Embraer responded on Saturday in a press release that it will “pursue all remedies against Boeing for the damages incurred.” The Brazilian aircraft maker called Boeing’s decision a wrongful termination.
In its press release, the Brazilian company made reference to the Boeing 737 Max’s two fatal crashes that have cost the aircraft maker at least $18.7 billion.
Embraer said the company was manufacturing “false claims” to avoid paying the $4. 2 billion because of its “own financial condition and 737 Max and other business and reputational problems.”
Under a pact signed Jan. 24, 2019, either planemaker could terminate the tie-up if the transaction hadn’t closed within 15 months.
Boeing is set to face a $100 million termination penalty for scrapping the deal. Embraer would have faced a maximum penalty of $75 million.
For Chicago-based Boeing, the penalty might be a small price. Boeing is now trying to preserve cash after being heavily affected financially by the 737 MAX groundings.
