Brazil court overrules injunction on Boeing-Embraer tie up on Friday, according to reports Brazilian court on Friday shot down a fresh injunction by a judge over a plan by plane makers Boeing of the US and Embraer of Brazil to create a $5.26-billion joint venture, Brazil’s state news agency said.It was the second time this month an appeals court has overruled decisions by a Sao Paulo judge, VictorioGuizioNeto, seeking to temporarily block the deal.
Federal Judge TherezinhaCazerta suspended a decision which had suspended the sale earlier in the week. Her decision came as a response to a request from Brazil’s solicitor general, known as the AGU, which argued that the injunction would hurt the economy and the previous decision represented government overreach into the free market. Legal challenges to the deal, which would reshape the global passenger aviation market, have been plentiful and are common in Brazilian deal making in general.
The higher court on Friday said that it was not up to GuizioNeto to decide the future of the proposed joint venture, noting that the Brazilian government held a golden share in Embraer that allowed it to veto strategic decisions if it wished. Embraer, the third-largest aircraft manufacturer in the world, was founded as a state group in 1969 before being privatized in 1994, though with Brasilia retaining the golden share.
Under the planned deal, Boeing is to take an 80% stake in Embraer’s commercial business, thus allowing it to offer planes with capacity of up to 150 seats — a market in which Boeing currently does not compete.Embraer’s military aircraft business was excluded to overcome Brazilian government opposition to giving up a national security asset to a foreign entity.
When these two plane makers originally announced their deal in July this year, they said they expected to wrap up the transaction by the end of 2019.Judge GuizioNeto two weeks ago ordered the accord be put on ice until the next government, which takes office January 1 where president-elect Jair Bolsonaro, will examine it.That was overturned by an appeals court four days later, then on Thursday GuizioNeto issued a new injunction at the request of unions working in Embraer’s Sao Paulo factories.
After the first injunction was overruled, the two plane makers said they were forging on with their deal subject to approval by the government of Brazil.
On Thursday, a judge issued the now overturned injunction blocking the proposed deal in response to a class action filed by Embraer’s union in Sao Jose dos Campos, where the plane maker is based. Earlier in December the same judge issued a similar injunction blocking the deal.
