Boeing is taking over the commercial jet business of Brazil's Embraer valued at $4.75 billion in a move that will allow it to compete more effectively in the medium-range aircraft market.
It follows a similar strategic partnership by arch-rival Airbus with Canada's Bombardier last October.
Under the terms of the deal, Boeing will hold an 80 percent stake valued at $3.8 billion, the companies said in a release Thursday, while Embraer will hold the remaining 20 percent.
The proposed partnership is expected to be accretive to Boeing's earnings per share beginning in 2020 and to generate estimated annual pre-tax cost synergies of approximately $150 million by the third year.
"By forging this strategic partnership, we will be ideally positioned to generate significant value for both companies' customers, employees and shareholders -– and for Brazil and the United States," said Dennis Muilenburg, Boeing's chairman, president and CEO.
Paulo Cesar de Souza e Silva, Embraer's CEO and president, added the tie-up would create a "virtuous cycle" for Brazilian aerospace, increasing sales potential and production and consequently adding value for shareholders and employees.
A statement said financial and operational details were still being finalized, a process which would continue over several months, after which the deal would be subject to shareholder and regulatory approval, including by the government of Brazil.
The transaction is expected to close by the end of 2019.
Embraer, the third largest aircraft manufacturer in the world, was founded as a state group in 1969 before being privatized in 1994, although the Brazilian government retained the right to make strategic decisions for the company.