Québecor’s Péladeau hints at offer for Transat

URGES ‘NO’ VOTE

TONTREAL • Quebec’s biggest press baron is throwing a wrench into Air Canada’s plans to acquire Transat A.T. Inc.

Québecor Inc. chief executive Pierre Karl Péladeau said Monday he will vote against the proposed acquisition of Transat by Air Canada, saying the deal is “against the public interest.” He urged all investors to follow his lead, and said he would be ready to make them a better offer if they reject the Air Canada transaction.

Transat shareholders are scheduled to vote on Air Canada’s i mproved $18-a-share offer Friday in Montreal. At least two-thirds must approve the proposal. Assuming all conditions are met, including regulatory approval, the deal is expected to close in early 2020.

Péladeau said he holds about 600,000 shares of Transat, representing 1.6 per cent of the company’s equity. Air Canada said last week that Montreal-based money manager Letko Brosseau, Transat’s largest shareholder with a 19.3-per-cent stake, now supports the transaction after earlier opposing it.

Péladeau said on his Facebook page he has been holding talks with “strong and established partners of international renown” in the past few months over a possible bid for Transat. Such an offer would include an “equitable” price and come with a “rigorous” business plan that bets on Transat’s strongest growth areas while seeking to create jobs in Quebec and expand the company’s Montreal head office, he said.

He didn’t specify what kind of per-share price he has in mind nor did he identify his potential partners.

Investors and regulatory authorities should reject the announced combination because it will lessen competition in the air-travel market, given that Air Canada and Air Transat are direct competitors on multiple routes, Péladeau said.

Should the deal be accepted by competition authorities, Air Canada would control more than 60 per cent of all transatlantic and sun-destination flights from Canada, Péladeau said. He called that level of concentration “unacceptable in any industry.”

Quebecor ’s CEO also warned of dire consequences on employment in Quebec if the deal proceeds — going as far as to predict the future closing of Transat’s headquarters. He criticized Air Canada for failing to keep its commitments to Quebec, recalling the 2012 bankruptcy of former maintenance unit, Aveos Fleet Performance.

Transat and Air Canada announced June 27 they had reached a definitive agreement on an all-cash transaction that valued the tour and airline operator at $520 million, or $13 a share. Air Canada agreed to maintain the Air Transat and Transat brands, as well as Transat’s Montreal head office and key functions. On Aug. 11, Air Canada said it had sweetened its bid to $18 a share, locking in Letko Brosseau’s support.

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