Air Canada raises offer for Transat from C$520m to C$720m

posted on 13th August 2019 by Justin Burns
Air Canada raises offer for Transat from C$520m to C$720m

Air Canada has raised its purchase price for the acquisition of all issued and outstanding shares of Transat A.T. – parent company of Air Transat – from C$13 to $18 per share.

Based on the increased consideration, the value of the all-cash transaction is now approximately $720 million, up from the $520 million previously agreed in June.

Air Canada has also entered into a lock-up and support agreement with Transat’s largest shareholder, Letko Brosseau & Associates, who beneficially owns or has control or direction over 7,277,104 Class B voting shares or approximately 19.3 per cent of all issued and outstanding shares of Transat.

Under the terms of its Lock-up and Support Agreement, Letko Brosseau has agreed to support and vote all of the Class B voting shares of Transat it controls at the Special Meeting of Shareholders of Transat on 23 August, 2019, or at any adjournment or postponement thereof, in favour of Air Canada’s acquisition of Transat.

Amendments to the arrangement agreement between Air Canada and Transat were unanimously approved by the Board of Directors of Transat and its Special Committee, and are included in an amending agreement.

“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 at the Special Meeting of Shareholders of Transat,” said Calin Rovinescu, president and CEO of Air Canada.

“We are therefore very pleased to have received Letko Brosseau’s strong endorsement for our transaction. We know this achieves the best possible outcome for all stakeholders,” he added.

Rovinescu said Air Canada intends to preserve the Transat and Air Transat brands and maintain the Transat head office and its key functions in Montreal. 

“Travellers will benefit from the merged companies’ enhanced capabilities in the highly competitive, global leisure travel market and from access to new destinations, more connecting traffic and increased frequencies,” he said.

Transat president and CEO, Jean-Marc Eustache added: “We are very pleased by the added stability brought about by Air Canada’s increased bid as supported by Transat’s largest shareholder, Letko Brosseau.

“We appreciate the time and energy that Air Canada has spent in extensive consultations with our shareholders, in addition to our own efforts, with a view to ensuring the best outcome for all stakeholders.

“This fully funded cash transaction is the ideal platform for Transat’s continued presence and growth in Montreal. We look forward to joining forces with a proven and successful player in our highly competitive and complex industry.”