US defense and aerospace giant Boeing on Saturday announced it terminated its master transaction agreement (MTA) with Brazil’s Embraer, walking away from the planned $4.2 billion merger.
Originally signed in 2012 and expanded in 2016, the agreement had envisioned a joint venture comprising Embraer’s commercial aviation business and a second joint venture to develop new markets for the C-390 Millennium medium airlift and air mobility aircraft.
Boeing noted it “exercised its rights to terminate after Embraer did not satisfy the necessary conditions.”
“Over the past several months, we had productive but ultimately unsuccessful negotiations about unsatisfied MTA conditions. We all aimed to resolve those by the initial termination date, but it didn’t happen,” Boeing’s Marc Allen said.
“It is deeply disappointing. But we have reached a point where continued negotiation within the framework of the MTA is not going to resolve the outstanding issues.”
In a separate statement, Embraer said it believed that the agreement had been wrongfully terminated, adding that “[Boeing] manufactured false claims as a pretext to seek to avoid its commitments to close the transaction and pay Embraer the $4.2 billion purchase price.”
“We believe Boeing has engaged in a systematic pattern of delay and repeated violations of the MTA, because of its unwillingness to complete the transaction in light of its own financial condition and 737 Max and other business and reputational problems,” the Embraer statement read.
The company added it would pursue all remedies against Boeing for the damages incurred as a result of Boeing’s “wrongful termination and violation of the MTA.”
The planned partnership between Boeing and Embraer had received unconditional approval from all necessary regulatory authorities, with the exception of the European Commission.
Boeing added it would maintain the existing master teaming agreement to jointly market and support the C-390 Millennium military aircraft.