By Marcelo Rochabrun and Carolina Mandl

SAO PAULO (Reuters) - Brazil's Embraer SA said on Monday it has finalized terms of a proposed deal to sell 80 percent of its commercial aviation business to Boeing Co, now valuing the division at $5.26 billion.

The new valuation is 11 percent more than the $4.75 billion offered when the deal involving Embraer's commercial division was originally announced in July.

Embraer expects it will receive $3 billion after accounting for closing costs.

It is unclear whether any part of the difference relates to debt. Embraer had some $4 billion in total debt, according to its most recent financial statements at the end of September.

Embraer's board Monday moved to present the deal for approval to the Brazilian government, which holds veto power over important business decisions at the plane maker. But a source close to the negotiations said they were optimistic about the prospects.

It was unclear how long the government could take to make a decision, but President-elect Jair Bolsonaro and his aides have spoken favorably of a Boeing-Embraer deal. Bolsonaro begins his presidency on Jan. 1.

The deal is also subject to shareholder approvals at both Embraer and Boeing.

Separately, Embraer announced details of a joint venture with Boeing intended to promote its signature defense plane, known as the KC-390. Under that partnership, Embraer will have a 51 percent stake in the operation.

Embraer was up 4.5 percent in early-morning trading in Sao Paulo.

(Reporting by Marcelo Rochabrun; Editing by Kirsten Donovan, Adrian Croft and Jeffrey Benkoe)

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