Brazil’s antitrust watchdog on Wednesday, CADE, dismissed allegations against a proposed takeover by Boeing of Embraer’s commercial plane division, maintaining its approval of the deal.
CADE was already expected to confirm the merger - On January 27, it approved Boeing’s purchase of Embraer’s commercial aviation division without restrictions. But federal prosecutors filed an appeal in February asking the antitrust agency to reconsider its decision.
Despite this approval Reuters reports, that falling markets have raised urgent questions over the fate of the $4.2 billion deal as aviation reels from the coronavirus crisis.
Shares in Embraer fell 14% on Wednesday, giving it a market value of about $1.3 billion, according to Refinitiv Eikon data. With shares trading at this level, Boeing would be paying three times the value of the whole company, which also makes military and business jets, just to gain control of its commercial unit.
The Embraer deal comes at a time of extreme pressure for Boeing, which earlier this week called for a $60 billion bailout of the US aeronautical manufacturing sector and last Friday revealed it had already full drawn on a $13.8 billion revolving credit facility, which had only been agreed in February.
It is unclear how Boeing would fund the purchase given its current financial status, while the Boeing-Embraer tie-up still has to hurdle EU regulatory approval.