Brazil judge again blocks Boeing-Embraer tie-up as deal nears close
SAO PAULO (Reuters) - A Brazilian judge on Thursday issued his second injunction blocking the proposed sale of 80 percent of planemaker Embraer's commercial aviation division to Boeing Co , as attempts to stop the deal intensified while the two companies neared closing the transaction.
SAO PAULO (Reuters) - A Brazilian judge on Thursday issued his second injunction blocking the proposed sale of 80 percent of planemaker Embraer's
The same judge issued a similar injunction earlier this month that was swiftly appealed and overturned last week. The latest decision was in response to a class action filed by Embraer's union in Sao Jose dos Campos, where the planemaker is based.
Embraer said it "will take all necessary judicial measures" to overturn the injunction. Boeing declined to comment.
Embraer shares were down almost 1.5 percent in Sao Paulo on Thursday afternoon after rising almost 3 percent in the morning before news of the injunction.
Challenges to the deal, which would help reshape the global aviation market as competition between Boeing and Airbus
Four left-wing congressmen also challenged the proposed tie-up and won the previous injunction. Prosecutors with Brazil's labour ministry are investigating whether the tie-up could lead to job losses. An investor group sued on Monday, saying the deal should have been a public tender offer.
Boeing and Embraer said on Monday they had finalised the terms of the agreement, increasing the valuation of the Brazilian planemaker's commercial division to $5.26 billion, citing higher closing costs. The net proceeds will remain the same.
The agreement needs approval from the Brazilian government because it holds a so-called "golden share" in Embraer that gives it veto power over strategic decisions and any change in its controlling interest. The planemaker formally sought that approval on Monday and it is expected within 30 days.
In his decision, the judge questioned whether Embraer's 20 percent participation in the proposed commercial aviation spinoff would actually be worth something.
"The brutal asymmetry in the shareholder structure of this venture prevents it from being carried out without compromising the survival of national interests," Judge Victor Giuizo Neto wrote.
The previous injunction was in response to a separate class action, filed by four legislators from the left-wing Workers Party.
Separately on Thursday, Embraer announced a firm order of 100 jets from Republic Airways.
(Reporting by Marcelo Rochabrun and Alberto Alerigi Jr; Editing by Christian Plumb, Jeffrey Benkoe and Dan Grebler)
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