Boeing and Brazilian airplane manufacturer Embraer said Thursday that they are in discussions about a potential tie-up.
The talks are ongoing, but the companies cautioned in a joint release any deal would be subject to the Brazilian government, regulators and each companies' boards and shareholders. The talks have been happening for some time, sources familiar with the situation told CNBC.
Shares of Embraer surged as much as 25 percent in midday trading.
Boeing could face a challenge in gaining Brazilian government approval to buy the country's aviation giant. Reuters, citing a government source, reported Brazil is open an Embraer partnership — but not a total sale of the company. Any deal which transfers control of Embraer is out, according to Reuters.
The Wall Street Journal reported Boeing is open to protecting jobs, the Embraer brand or structuring a deal that will maintain Brazilian government interest in the company's defense business.
Boeing Co on Thursday said that after taking over Brazilian planemaker Embraer SA’s passenger jet unit, it will call the division Boeing Brasil - Commercial, dropping one of Brazil’s most iconic company names.
The name change comes after Boeing agreed to pay $4.2 billion to buy 80% of Embraer’s operation making passenger jets with fewer than 150 seats. Embraer will retain a 20% stake. That division is still Embraer’s most profitable and considered a gold standard of Brazilian engineering.
Boeing has not made a decision yet about whether to rebrand the small and mid-sized planes, which currently carry the Embraer name followed by a model code.