- Embraer (ERJ -10.4%) plunges ~10% after Boeing's (BA -0.3%) deal to buy a controlling stake in its commercial aircraft arm disappoints investors by implicitly valuing the Brazilian company's commercial unit at $4.75B, below analysts' expectations.
- "Our initial take: lower than expected valuation for the Commercial Aviation segment but still an upside to Embraer's current price," according to BTG Pactual.
- There are also serious concerns about the details, William Blair analyst Nicholas Heymann tells Barron's, as the deal is not expected to close until the end of 2019 and will require approval from Brazil’s government, which could be complicated by a general election.
- The $3.8B that Boeing will pay for an 80% stake in ERJ’s commercial aircraft operations may not change hands until 2020, and it is not clear how much of the money will make its way to shareholders vs. bondholders, Heymann also says.
- ETFs: EWZ, BRZU, BZQ-OLD, UBR, FBZ
- Now read: EWZ - Correction Opportunity
Original article