Drama rises in Quebec developer’s bid to block Transat sale

Group Mach and Transat A.T. Inc. accused each other of “abusive” tactics on Thursday at a securities tribunal hearing in Montreal over Mach’s attempt to block Air Canada’s $520 million purchase of the travel company.

Montreal developer Mach had courted Transat earlier this year, but the Montreal-based airline and tour operator passed on its offer and in June accepted an all-cash bid of $13 per share from Canada’s largest airline.

But Mach refused to give up. Last week, it offered to buy nearly one-fifth (19.5 per cent) of Transat’s voting shares for $14 per share, a move that could dilute support for the Air Canada deal.

Transat responded this week by asking Quebec’s financial markets regulator to block Mach’s new proposal, worried it could confuse shareholders and cause the Air Canada deal to fall through when it goes to a vote later in August.

“They are derailing the deal while proposing something that is not in the best interest of our shareholders,” Transat spokesman Christophe Hennebelle said Thursday. “They make it seem like it’s a better deal, but it’s not.”

If Mach is successful in buying one-fifth of Transat’s shares, the airline might not have enough support for its preferred deal since a sale requires approval from twothirds of shareholders. Its largest shareholder, Letko, Brosseau & Associates Inc., which owned about 19 per cent of voting shares as of July 17, told the Globe and Mail in May it opposed the deal. (Letko Brosseau did not reply to a request for comment on its current stance.)

Transat’s second-largest shareholder, Fonds de solidarité FTQ, considers the effect on employment and Quebec’s economy along with the offer price. The labour-sponsored fund, which owns about 12 per cent of Transat, said it is still analyzing the situation. The Caisse de dépôt et placement du Québec, the third-largest Quebec shareholder at about six per cent, declined to comment.

Transat is looking to eliminate Mach’s offer as the Aug. 23 vote on the Air Canada deal approaches. It described Mach’s proposal as “highly abusive, coercive, misleading and conditional.”