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Boeing to take 51% in new company with Embraer

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Boeing will hold a 51 percent stake in a company currently under negotiation with Brazilian aircraft maker Embraer, newspaper columnist O Globo Lauro Jardim reported on Sunday.

Boeing has agreed to the Brazilian government’s demand that the US company have no more than a controlling stake of 51 percent, Jardim said, without citing sources.

Boeing did not immediately respond to requests for comments. Embraer said it will not comment on the information.

Boeing has sought approval from the Brazilian government for a partnership with Embraer that would create a new commercial aviation company, excluding the Embraer defense unit, it reported to Reuters three weeks ago.

Valor Econômico reported later that Boeing’s proposal would give it a 80 percent to 90 percent stake in a new commercial jet business with Embraer. Embraer is the third largest manufacturer of aircraft and the leader in the regional jet market with 70 to 130 seats. Under the proposed contract, Boeing would be the market leader in smaller passenger aircraft, creating stronger competition for the CSeries aircraft program designed by Bombardier Canada and backed by European rivalAirbus. Boeing’s initial plan to buy Embraer was rejected by the Brazilian government because it did not want a foreign company controlling its defense unit for strategic safety reasons.

The government maintains a “golden share” in Embraer, previously a state-owned company, which gives it veto power over strategic decisions, including Boeing’s approach.

On Thursday, Brazilian Defense Minister Raul Jungmann told reporters that Boeing understood Brazil’s refusal to give up control of Embraer. He said negotiations on setting up a third company were moving well.