SAO PAULO (Reuters) – Brazilian planemaker Embraer said on Tuesday a key shareholder meeting to vote on the sale of 80 percent of its commercial aviation business to Boeing Co could proceed as scheduled on Tuesday, after it got an injunction overturned.
A federal judge had suspended the meeting on Friday at the request of a union representing some Embraer workers which had lobbied against the deal, partly on concerns Boeing would slash jobs if the tie-up was approved.
Shares in Embraer surged 3 percent in early Sao Paulo trading on news the meeting would take place.
Last-minute legal twists are common in Brazil, and Embraer had already overturned several injunctions that temporarily blocked the deal.
Under the proposed terms, Boeing will pay $4.2 billion to control Embraer’s most profitable division, its commercial aviation business.
The deal will provide a cash influx that the Brazilian planemaker has defended as crucial to its survival as increased competition between Boeing and Airbus squeezes out smaller rivals.
“The potential operation with Boeing will save Embraer,” lawyers for the Brazilian planemaker said in July in a court filing as it battled an earlier challenge to the deal.
But critics say the arrangement will leave Embraer weaker and financially dependent on its two remaining divisions, executive jets and defense, both of which have posted losses in recent quarters.
Foreign shareholders, who own a tiny slice of the company, overwhelmingly voted to approve the deal.
Brazil’s securities regulator late on Monday denied a separate request filed by minority shareholders to suspend the shareholder meeting.
Embraer’s union has vowed to protest the meeting, which will be held at the planemaker’s headquarters in the city of Sao Jose dos Campos. The union’s plans prompted Embraer to seek legal restrictions of its own.
A judge sided with Embraer last week, allowing Brazil’s military police to safeguard the planemaker’s premises while the meeting takes place.
The deal has already been approved by Brazil’s government, which holds veto power over important business decisions at Embraer, which was a state company until its privatization in the 1990s.
(Reporting by Marcelo Rochabrun in Sao Paulo; Additional reporting by Gram Slattery in Rio de Janeiro; Editing by Jason Neely, Keith Weir and Bernadette Baum)
