BAe in talks to buy pounds 180m stake in Embraer

BRITISH AEROSPACE yesterday confirmed it is in talks to acquire a minority stake in Embraer, the Brazilian commercial and military aircraft manufacturer, as part of its attempts to create a global aerospace company.

Embraer is planning to sell a 20 per cent stake, worth around pounds 180m, and is in talks with a number of other potential partners, including Dassault Aviation and Aerospatiale Matra of France.

A BAe spokesman said: "We are in talks with Embraer and so are a number of other companies. It is all part of the globalisation of the aerospace industry." He added that talks were still at an early stage.

A link-up with Embraer would help BAe in its attempts to land a big fighter jet contract from the Brazilian government. BAe has offered the Brazilians the Saab Grippen fighter, in which it has a 50 per cent stake. BAe also owns a 35 per cent stake directly in the Saab aerospace business.

The Grippen, an advanced single-engined fighter which competes directly with the F-16, has already been selected by the South Africans in a 28- aircraft deal worth an estimated pounds 500m.

If BAe were to forge an alliance with Embraer, part of the aircraft might be built under licence in its Brazilian factories.

Embraer makes both civil and military jets and in the past has supplied its Tucano aircraft to Shorts of Belfast as a trainer jet for the Royal Air Force. It needs funding to develop two new 70 and 108-seater commercial aircraft for the regional jet market.