SEATTLE -- Boeing Co. said Wednesday it has agreed to sell its de Havilland division to a joint venture of Bombardier Inc. and the province of Ontario for $260 million.
Reports about the transaction, which will give Montreal-based Bombardier a 51 percent stake in the commuter-aircraft producer and the remaining 49 percent to Ontario, had emerged earlier this week.
The sale, expected to be completed within a month, would end Boeing's 18-month effort to unload de Havilland, which Boeing acquired from the Canadian government in 1986.
Boeing agreed last year to sell de Havilland to France's Aerospatiale SNI and Italy's Alenia S.p.A. But the European Community Commission block the deal last October because it gave the companies too big a share in the market for commuter turbo-prop aircraft.
Aerospace analyst Lawrence Harris of Kemper Securities Group in Chicago said the new deal should go through.
'It's not over until it's over but I don't see the same complications arising this time, particularly with the province participating,' Harris said.
News of the sale helped boost the stock price of Boeing, which gained $2.375 to close at $51.875 a share Wednesday on the New York Stock Exchange.
Boeing said the deal calls for the creation of de Havilland Inc., which would then acquire assets worth $260 million (Canadian) from Boeing in return for cash of $70 million (Canadian) and the assumption of liabilities of about $190 million (Canadian).
Bruce Gissing, chairman of Boeing of Canada, said, 'Nearly two years ago we determined that it would be in de Havilland's best interest to be aligned with an organization more directly tied to the regional aircraft market.
Gissing said Boeing will still be involved in the Canadian aerospace industry through facilities in Winnipeg and Arnprior and through its subcontract work.
The Ontario and Canadian governments each will provide several hundred million dollars in coming years to help the company's restructuring efforts.
De Havilland employs about 3,700 people. The company's aerospace products include the Challenger executive jet.
Bombardier Inc. is a Canadian corporation involved in design, development, manufacturing and marketing transportation equipment, civil and military aerospace and motorized consumer products. The company employs over 25,000 worldwide.
The deal gives Bombardier the opportunity to buy Ontario's interest in de Havilland after four years.
Bombardier chairman and chief executive officer Laurent Beaudoin said at the signing ceremony: 'By combining their resources, skills and experience and building on their united strengths, Bombardier and de Havilland can look forward to achieving a strategic position in the aerospace industry.'
The deal was praised by the Canadian Auto Workers, which represents the majority of de Havilland workers.
'This agreement places de Havilland, the cornerstone of Canada's aircraft industry, once again on a solid foundation for a long term future,' said CAW spokesman Jim O'Neil. CAW members recently ratified a one-year extension of their collective agreement.
Toronto-based de Havilland manufactures and assembles the Dash 8 37- to-40 seat Series 100 and 50-to-56 seat Series 300 regional aircraft.
Boeing purchased de Havilland from the Canadian government in January 1986 for $112 million, an acquisition praised at the time by analysts, who said it would improve Boeing's product line.
Since then, however, the unit has been a constant drain on Boeing's earnings. While the Seattle aerospace giant has not released specific numbers on the subsidiary, analysts say de Havilland probably has lost several hundred million dollars since Boeing acquired it.
Boeing is believed to have spent more than $400 million to improve de Havilland's plant in Downsview, Ontario, the production site for the Dash 8 turboprop.
The company settled a lawsuit filed against the Canadian government that alleged Boeing was misled about the condition of de Havilland's facilities at the time of the 1986 purchase. Boeing received about $97 million as part of the settlement.
Other problems also have plagued the operation, including rocky relations with the Canadian Auto Workers union.