WASHINGTON — Boeing is engaged in talks with Embraer over acquiring the Brazilian aerospace firm, the companies confirmed Thursday.

If allowed to proceed, Boeing would gain several new military aircraft, including Embraer’s Super Tucano turboprop and its KC-390 transport aircraft. Analysts were hesitant to say there would be any real benefit for Boeing’s defense business, but it would widen the U.S. aerospace giant’s portfolio in some unexpected ways.

The companies are allegedly discussing a deal that would put a premium on Embraer’s $3.7 billion market value, according to the Wall Street Journal, which broke the news Thursday. Citing sources familiar with the talks, WSJ said the matter had been put on hold as the companies await approval from the Brazilian government.

Boeing and Embraer have confirmed the two companies “are engaged in discussions regarding a potential combination, the basis of which remains under discussion,” according to a statement made to reporters after the WSJ story broke.

“Any transaction would be subject to the approval of the Brazilian government and regulators, the two companies’ boards and Embraer’s shareholders,” the companies said.

It appears such approval may be hard won, if it comes at all. After being informed of the potential acquisition, Brazilian President Michel Temer said he would only be open to a deal that does not give Boeing full control of Embraer, according to the Brazilian newspaper Fohla de Sao Paolo.

A deal could benefit Embraer more than Boeing, as it would allow the Brazilian firm to harness the marketing power and global reach of the world’s largest aerospace company, said Byron Callan, a defense analyst at Capital Alpha Partners. But it could have significant advantages for Boeing as well.

“It would be a credible product line extension,” he said. “You’re not talking about big numbers from a financial standpoint, but from a strategic standpoint … it would certainly represent a product line extension that no one else would have right now.”

Even if Temer changes his mind, Boeing may decide to walk away from the deal due to the reportedly high premium being put on Embraer’s value, said Richard Aboulafia, an aerospace analyst at the Teal Group.

“From the defense side, the most interesting aspect would be Boeing selling the KC-390 military transport aircraft both to the U.S. and abroad. That would be significant,” Aboulafia said.

Embraer has cemented Brazil as a launch customer for the KC-390 — a multirole twin-engine plane designed for missions such as aerial refueling, transporting troops and fire support — but the company has struggled to find a follow-on buyer. Boeing and Embraer reached an agreement in 2016 to jointly market the aircraft internationally, but the U.S. aerospace company has so far taken a backseat role.

“Does Boeing take that airplane and maybe market more aggressively in the United States?” Callan wondered. “If you think about the global reach of Boeing and what it might be able to do with that airplane, it could give more competition in the C-130J in the global market.”

Getting Big Army or Air Force to sign onto a KC-390 contract would be a long shot, given the service’s longstanding procurement of Lockheed Martin’s C-130 Hercules, but it could break into the U.S. market through Special Operations Command, Aboulafia said.

“That would be a very nice endorsement,” he said.

The acquisition would also allow KC-390 customers to tap into Boeing’s global sustainment enterprise, which could also be a selling point, he added.

However, Aboulafia and Callan were at odds on whether other Embraer military aircraft would prove equally promising.

“I think of the Brazilian defense market, which from Boeing’s standpoint mattered a whole heck of a lot more when they were shopping for fighters,” Aboulafia said. “But they rejected the Super Hornet and they went with the Gripen.”

Embraer is currently standing up a final assembly line in Brazil where it will contribute to the manufacture of Swedish aerospace company Saab’s Gripen E.

That and Embraer’s collaboration with Saab on the Erieye — an airborne early warning and control system integrated aboard Embraer’s E-99 and other business jets — could open the door to greater cooperation between Boeing and Saab, which have already teamed up on the U.S. Air Force’s T-X training jet competition.

“You can connect the dots,” Callan said. “Is there another deal that happens out of this where— I don’t know if Boeing is going to own Saab — but do you make an investment in Saab and round this out? If you’re building an advanced combat aircraft production line in Brazil with the Gripen E, where do you go with that?”

Meanwhile, Embraer’s Super Tucano could be another big opportunity for the companies as the U.S. Air Force considers whether to buy a fleet of low-cost attack aircraft, called OA-X, Callan said.

The Super Tucano is marketed as the A-29 in the United States, where it is sold by a Embraer-Sierra Nevada Corporation partnership, and the aircraft in August participated in a series of experiments at Holloman Air Force Base, New Mexico.

The A-29 is widely presumed to be the winner of any eventual OA-X competition, as the service has already chosen to buy it for Afghanistan and Lebanon.

Yet Aboulafia pointed out that sales of even a couple hundred aircraft would do little to impact Boeing’s bottom line.

“I’m hard-pressed to think of why Boeing would care,” he said.

If the agreement goes through, it would be Boeing’s second major acquisition in the span of a couple months. The company announced a deal to buy Aurora Flight Sciences in October.

An agreement to buy Embraer could also help Boeing counter its biggest rival in the commercial market: Airbus, which recently reached a partnership with Bombardier on the latter’s C Series jets.

Valerie Insinna is Defense News' air warfare reporter. She previously worked the Navy/congressional beats for Defense Daily, which followed almost three years as a staff writer for National Defense Magazine. Prior to that, she worked as an editorial assistant for the Tokyo Shimbun’s Washington bureau.

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