Boeing and Brazil-based planemaker Embraer have agreed to the terms of a joint venture (JV) partnership.

The transaction will enable Boeing to own an 80% share in the JV for $4.2bn, with Embraer owning the remaining 20%.

The deal is subject to approval by the Government of Brazil and customary closing conditions, as well as shareholder and regulatory approvals.

Boeing will control the operations and management of the JV that will report directly to Boeing chairman, president and CEO Dennis Muilenburg.

“This alliance will strengthen both companies in the global market and is aligned with our long-term sustainable growth strategy.”

In addition, the deal is expected to bring annual pre-tax cost synergies of around $150m by the third year of operations.

Muilenburg said: “Boeing and Embraer know each other well through more than two decades of collaboration, and the respect we have for each other and the value we see in this partnership has only increased since we announced our joint efforts earlier this year.”

In July, Boeing signed a memorandum of understanding (MoU) with Embraer to gain control over its commercial jet business.

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Embraer president and CEO Paulo Cesar de Souza e Silva said: “This alliance will strengthen both companies in the global market and is aligned with our long-term sustainable growth strategy.”

Furthermore, Embraer and Boeing have agreed to the terms of a separate JV to develop new markets for the KC-390 multi-mission medium airlift.