Boeing will take over the commercial aircraft division of Embraer, the Brazilian regional jet manufacturer.
The two companies announced a joint venture on Thursday valued at $4.75 billion.
The deal gives Boeing a bigger stake in the market for smaller jets. But it’s not just about expanding market share or competing with Airbus, said Carter Copeland, aerospace and defense researcher and founding partner at Melius Research.
“Boeing is looking to learn from what Embraer is good at: designing and developing airplanes more cheaply,” he said.
For Embraer, the venture helps level the playing field with Bombardier, which recently joined with Airbus in a similar partnership. The Brazilian company will also benefit from Boeing's global sales and support network, he said.
Boeing will own an 80% stake in the venture, and Embraer will have 20%. The company will be led from Brazil, with Boeing retaining operational and management control. Boeing and Embraer said they expected the deal to close by late next year, pending regulatory approval.
Boeing said it expected the venture to create $150 million in pretax savings by its third year.
A separate joint venture between Boeing and Embraer will be dedicated to developing new markets for defense products, most notably the K-390 multi-mission aircraft.