Brazil’s Embraer to fight bid by leftist lawmakers to halt Boeing talks

RIO DE JANEIRO (Reuters) – Embraer (EMBR3.SA) said on Monday it will defend itself against a lawsuit brought by leftist lawmakers aimed at halting a bid by Boeing Co (BA.N) to take over most of the Brazilian planemaker’s commercial jet unit, the latest legal headache for the proposed tie-up.

The Brazilian aviation company Embraer factory is seen in Sao Jose dos Campos, Brazil, July 24, 2018. REUTERS/Roosevelt Cassio

The lawsuit, filed by four congressmen for the left-wing Workers Party against the federal government and Embraer, seeks an injunction to freeze talks between the two planemakers, the Brazilian company said.

While Embraer is a private company, the government holds a special stock that grants it veto power over major business decisions.

The lawsuit is just the latest headache for a deal that has drawn fire from critics worried about its impact on Brazilian jobs and those concerned about Embraer’s financial viability without the lucrative commercial jet unit.

The proposed deal with Boeing would not include Embraer’s defense and executive jets business, where the Brazilian government would maintain veto power.

A Brazilian labor judge this month rejected a call to make the proposed acquisition dependent on a pledge to preserve all local jobs at the company.

That injunction request was filed by Brazil’s labor prosecutors, a special group that investigates potential violations of the country’s strict labor laws. They responded to the judge’s rejection by announcing plans for a civil lawsuit against the government.

Embraer executives said earlier this month they do not expect to finalize the deal until late next year, forcing Embraer to compete single-handedly against the European and Canadian rivals.

Reporting by Alexandra Alper; Editing by Sandra Maler and Leslie Adler

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