Boeing (BA) appeared closer to taking control of Embraer's (ERJ) commercial jet business, after Brazil's defense minister signaled that worries about the military segment have been resolved.
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The Brazilian government owns a "golden share" in Embraer, allowing it to veto any tie-ups. But Defense Minister Joaquim Silva e Luna was upbeat about a deal, telling Bloomberg that talks will likely be finished by the end of the year.
"All of us, Boeing and Embraer too, are optimistic," he said. "There was concern about preserving investments in our defense base, so that strategic projects wouldn't be interrupted. That has been overcome."
Embraer's military jet unit had been a major sticking point for Brazil's government, and a full takeover of the total company was reportedly off the table.
Instead, talks reportedly involved creating a new joint venture for Embraer's commercial jet business that Boeing would control with a majority stake.
"We don't know how we'll split or join assets, but the tendency is that there's a marriage," Silva e Luna said Wednesday.
Shares closed up 1.2% at 359.21 on the stock market today, consolidating in a cup base with a 371.70 entry point. Embraer rose 1.8%.
Boeing's interest in the Embraer comes as it looks to fend off potential competition in smaller narrow-body jets from Bombardier's new C Series line. In October, Boeing rival Airbus (EADSY) bought a majority stake in the struggling C Series business.
Boeing is also interested in Embraer's engineering expertise to help jump-start a new line of midmarket planes that can better compete against Airbus' A320neo jet.
But on a Q4 conference call, CEO Dennis Muilenburg said that a decision on the new plane wouldn't be affected by the talks with Embraer.
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