The purchase agreement between Brazil's aviation company Embraer and the US giant aerospace and defence company, Boeing, fell apart. Brazil will both take the US company to arbitration and try to deal with China.

Brazil's Embraer firm said on Monday that the US firm suddenly cancelled the $ 4.2 billion deal and an arbitration process has started against Boeing Co.

The fact that the process related to Boeing's partnership with Embraer ended with such a sudden decision harmed the company's stocks. The company was having a hard time due to the accidents of the new generation 737 Max aircraft. Boeing's shares fell to the lowest level in the past eight years.

On the other hand, the Brazilian government, Embraer's biggest defence military customer, was concerned about this merger. The government saw China as a potential new partner.

Embraer maintains a close relationship with the Brazilian government, which has retained its veto power over strategic decisions in the company after its privatization.

Brazilian President Jair Bolsonaro said on Monday that Embraer might be ready to discover new buyers.

“Maybe we will start new talks with a new company,” said Bolsonaro.

Bolsonaro had supported and ratified the Boeing agreement, even if he was worried that Boeing's involvement might affect Brazil's military interests.