RIO DE JANEIRO (Reuters) – A Brazilian judge on Friday suspended negotiations for the tie-up of Brazilian aircraft maker Embraer SA and Boeing (NYSE:) Co, according to a court document.
The court issued an injunction suspending an Embraer shareholders meeting scheduled for Feb. 26 that would vote on whether to approve the terms already agreed upon by the two companies.
Neither Embraer nor Boeing immediately responded to requests for comment. The decision will likely be appealed to a higher court. Several previous injunctions blocking the progress of the negotiation have been overruled.
Federal judge Victorio Giuzio Neto wrote in his decision on a union lawsuit against Embraer that until all alleged illegalities in the negotiating process were evaluated, the shareholders meeting must be suspended.
In the deal, Embraer will sell 80 percent of its commercial plane division for $4.2 billion to Boeing, which will have total control of the new venture.
In the lawsuit, unions representing Embraer workers said the company’s management did not respect local legislation for listed companies, particularly in respect to what decisions should have been taken to shareholders instead of being made by the company’s management alone.
The Brazilian government, who holds a golden share in Embraer, has already given its approval for the deal to go ahead.
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