Air Canada beefs up its Transat offer
Air Canada is closer to landing its deal to buy Transat A.T. Inc. after raising its offer price to $720 million to win over its rival’s largest shareholder.
Canada’s largest airline and Transat, a budget airline and tour operator also headquartered in Montreal, announced Sunday that Transat’s board unanimously supports Air Canada’s new bid of $18 per share, a 38 per cent increase from its original offer of $13 per share or $520 million. Critically, Air Canada locked up support from Letko Brosseau & Associates Inc., which owns about 19.3 per cent of Transat’s voting shares. Letko Brosseau didn’t support the initial bid, but signed a lock-up and support agreement under the new terms.
“After extensive consultations with Letko Brosseau and several other large shareholders of Transat, we agreed to materially increase our price to ensure the transaction receives the necessary level of support,” Air Canada chief executive Calin Rovinescu said in a statement.
Air Canada got another boost earlier on Monday when Quebec’s Tribunal administratif des marchés financiers sided with Transat and ordered real-estate developer Groupe Mach Inc. to drop efforts to acquire a minority stake in the tour operator.
Mach was seeking to use the shares to block the Air Canada deal. Transat’s stock price jumped 42 per cent to close at $16.75 on Monday. Shareholders are scheduled to vote on the new offer next week. It requires two-thirds support.