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.