SAO PAULO (Reuters) – A Brazilian judged on Thursday issued his second injunction blocking the proposed sale of 80 percent of planemaker Embraer’s (EMBR3.SA) commercial aviation division to Boeing Co (BA.N), as attempts to stop the deal intensified while the two companies neared a close on the agreement.
FILE PHOTO: The logo of Brazilian planemaker Embraer SA is seen at the company’s headquarters in Sao Jose dos Campos, Brazil February 28, 2018. REUTERS/Roosevelt Cassio/File Photo
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.
Challenges to the deal, which would help reshape the global aviation market as competition between Boeing and Airbus (AIR.PA) intensifies, have been plentiful and are common in Brazil.
Embraer shares were up nearly 1 percent.
Four left-wing congressmen also challenged the proposed tie-up and won the previous injunction. Prosecutors with Brazil’s labor ministry are investigating if the tie-up could lead to job losses. And an investor group sued on Monday, saying the deal should have been a public tender offer.
Boeing declined to comment on the injunction while Embraer did not have an immediate comment.
Boeing and Embraer said on Monday they had finalized the terms of their deal, 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, which gives it veto power over strategic decisions and any change in its controlling interest. The planemaker formally sought the approval on Monday.
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 and Jeffrey Benkoe