December 22, 2017 / 9:29 AM / 3 years ago

BUZZ-Street View: Boeing-Embraer deal makes "substantial" strategic sense

** Boeing Co and Embraer SA are discussing a “potential combination,” the companies said on Thursday.


** Morgan Stanley says full sale of Embraer to Boeing is unlikely to materialize

** However, the deal in commercial segment makes substantial strategic sense and could imply additional upside for Embraer shares - MS

** Jefferies says assuming a 40 pct takeout premium, deal would add 2 pct or $0.20 to BA’s 2020 core EPS

** From commercial aerospace perspective, combination would contain sound strategic rationale by expanding BA’s reach in lower end of commercial aircraft market, says Jefferies

** JP Morgan says Brazil govt might want some investment commitment from BA, as sale of Embraer would mean forfeiting control of the country’s leading exporter of value-added manufacturing products

** Deal would suggest that BA sees potential for small narrowbody market, which is plus for both Bombardier and Embraer - JP Morgan

** Melius says given inevitable political challenges, Embraer’s willingness to engage in talks suggests that it believes deal to dramatically increase prospects for Embraer’s long-term success

** Says the deal could see clear benefits to Embraer’s financials and competitive market position could be substantial (Reporting by Jasmine I S; Editing by Gopakumar Warrier)

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