Boeing is buying a controlling stake in the commercial aircraft unit of Brazilian manufacturer Embraer, with the $4.75 billion joint venture upping the ante in Boeing's rivalry with Airbus in the market for small jetliners.

The preliminary deal, announced by the companies on Thursday, will have Boeing claiming an 80 percent stake of a venture running Embraer's commercial airplane and services business, with Embraer holding the remaining 20 percent.

"The agreement with Boeing will create the most important strategic partnership in the aerospace industry, strengthening both companies' leadership in the global market," Paulo Cesar de Souza e Silva, Embraer's CEO, said in the joint statement.

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The partnership follows years of discussions between the companies, and extends the passenger-jet duopoly help by Boeing and Airbus, which took control of Bombardier's C Series jet at the start of the month.

China, Russia and Japan are all developing regional jet aircraft viewed as potentially threatening Embraer's segment-leading market share in the regional jet business.

Boeing and Embraer said they intend to create an additional joint venture to develop new markets for defense products and services to strengthen the Brazilian company's military offerings.

Subject to approval from shareholders, regulators and Brazil's government, the deal is expected to close by the end of next year, Boeing and Embraer said.

Shares of Boeing edged higher in mid-day trading, while those of Embraer fell nearly 10 percent, helping to fuel losses in Brazilian equities as investors found the value placed on Embraer's commercial unit disappointing.