By Brazil Stock Guide – Brazilian aircraft manufacturer Embraer (NYSE: EMBJ; B3: EMBR3) has agreed to acquire a 51% stake in India’s Novavayu Aerospace Ltd., an indirect wholly owned subsidiary of Mahindra & Mahindra (NSE: M&M), in a transaction that will give the Brazilian company majority ownership of the aerospace business.
The agreement was signed on Oct. 9, according to a regulatory disclosure filed by Mahindra with Indian stock exchanges on Wednesday, Oct. 14.
Once the transaction is completed, Novavayu Aerospace, also known as NAL, will cease to be a wholly owned subsidiary of the Mahindra Group. It will instead become an associate of Mahindra Defence Systems Ltd. (MDSL), an indirect wholly owned subsidiary of Mahindra & Mahindra.
Under the proposed ownership structure, Embraer will hold 51% of NAL, while Mahindra Defence Systems will retain the remaining 49%.
The transaction will give Embraer a controlling interest in an Indian aerospace company while preserving Mahindra’s participation through its defense subsidiary.
Mahindra said additional information about the investment agreement was made available on its corporate website in accordance with disclosure requirements established by the Securities and Exchange Board of India (SEBI), the country’s capital markets regulator.
Embraer strengthens ties with India’s defense industry
The planned acquisition comes as Embraer and Mahindra deepen their cooperation in India’s military aviation sector.
The two manufacturers have been working together to position Embraer’s C-390 Millennium military transport aircraft for the Indian Air Force’s Medium Transport Aircraft program.
The partnership is intended to support potential local manufacturing, industrial integration and technology cooperation if the C-390 is selected by India’s government.
On Oct. 1, the companies identified Nagpur, in the Indian state of Maharashtra, as the proposed location for a final assembly line for the C-390 Millennium.
The industrial project remains conditional on India selecting the Brazilian aircraft, and the acquisition of Novavayu does not itself constitute an aircraft order.
The C-390 Millennium is a multi-mission military transport aircraft designed for tactical and logistical operations, including cargo and troop transportation, medical evacuation and humanitarian missions.
Ownership change subject to transaction completion
The acquisition will alter Novavayu’s ownership structure, transferring majority control from the Mahindra Group to Embraer.
For Mahindra, the transaction will result in the reclassification of Novavayu from a wholly owned subsidiary to an associate company within its corporate structure.
The investment agreement marks a further step in the relationship between the Brazilian aerospace manufacturer and one of India’s largest industrial groups, with the companies pursuing opportunities in the country’s military aviation market.
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