Chicago-based Boeing has held talks to acquire Brazilian aircraft maker Embraer SA, The Wall Street Journal reported, citing unidentified people familiar with the matter.
Embraer would get a substantial premium over its $3.7 billion market value, the newspaper said Thursday. The companies are awaiting word from the Brazilian government, which has veto power over a sale, on whether it would allow a transaction to go through, the Journal said.
The acquisition would be Boeing's largest since it bought U.S. rival McDonnell Douglas Corp. in 1997, and would advance a consolidation wave sweeping through the aerospace sector. Boeing would gain an aircraft offering in the 100-seat category to counter a new threat from European rival Airbus, which agreed in October to take control of Canadian company Bombardier Inc.'s C Series program -- the target of a trade complaint brought by Boeing.
Embraer's American depositary receipts jumped 25 percent to $24.94 at 12:23 p.m. after advancing as much as 31 percent for a record intraday gain. Boeing slid less than 1 percent to $297.13.
The Brazilian manufacturer didn't immediately respond to a request for comment. A Boeing spokesman wasn't immediately available to comment.
A deal would add the largest regional-jet manufacturer to Boeing, already the world's largest commercial jet maker, while expanding the company's manufacturing base outside the U.S. for the first time.
Created in 1969 by the Brazilian government and privatized in 1994, Embraer has been held up as a source of national pride and an example of efficiency and innovation in a commodities-driven country, though corruption scandals in the past few years have tainted that image.
Embraer and Boeing are already close partners. They collaborate on several projects at Boeing's Research and Technology Center in Brazil, such as a titanium recycling technique and software to help calculate and reduce airplane noise. Boeing is also Embraer's commercial and maintenance partner for the KC-390, a military cargo plane still being developed.