Embraer will likely sue Boeing after the collapse of a $4.2 billion deal to buy Embraer’s commercial aircraft division. Boeing announced on Saturday it was pulling out of the deal and said it’s because Embraer didn’t live up to its end of the deal. “Boeing has worked diligently over more than two years to finalize its transaction with Embraer. Over the past several months, we had productive but ultimately unsuccessful negotiations about unsatisfied MTA (master transaction agreement) conditions,” said Marc Allen, president of Embraer Partnership & Group Operations. “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.”
But Embraer said it fulfilled its obligations under the MTA and it was Boeing that defaulted to wriggle out of a deal it couldn’t afford. “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,” Embraer said in a terse statement Saturday. Friday was the deadline for the two companies to have completed a series of conditions before the deal could proceed and Embraer says it wants money from Boeing for its departure. “Embraer will pursue all remedies against Boeing for the damages incurred by Embraer as a result of Boeing’s wrongful termination and violation of the MTA,” the company said.
As a company, Boeing’s seems to go out of its way to incur self-inflicted wounds to its reputation. From the debacle of moving from Seattle to Illinois, to the stupid stunt with the Bombardier C-Series , the continuous 737 Max fumbles and now this. It appears that if you do business with Boeing, you do so at your own risk.
I can see both sides of the argument and how both should have come to a more beneficial less public agreement. Obviously, Boeing can’t go through the deal in the financial shape it is in. But backing out of it while saying it was Embraer’s fault is another one of these pokers moves that haven’t worked well for the company these past few years. As well, Embraer shouldn’t have rushed removing that part of its business so quickly until they had more from Boeing.
It’s ugly no matter how you look at it. Both companies are in terrible shapes and we can expect Embraer suing Boeing and Boeing deflecting it. It’s going to be a spectacle for the next few months.