Air Canada sweetens Air Transat takeover offer to $18 per share
Air Canada ups offer by $200 million to win over dissident shareholders
Air Canada will spend more to buy Transat A.T. Inc., the airline announced Sunday, saying it has upped the total offer by $200 million to win the support of the tour company's largest shareholder.
The new bid sees Air Canada spending $18 per share, rather than $13. That brings the total offer to roughly $720 million, up from a previously announced bid worth $520 million.
"We know this achieves the best possible outcome for all stakeholders. For shareholders of Transat and Air Canada, the combination delivers excellent value, while also providing increased job security for both companies' employees through greater growth prospects," said Calin Rovinescu, president and CEO of Air Canada.
He added that Air Canada now has the backing of Letko Brosseau and Associates Inc., Transat's largest shareholder, which holds just over 19 per cent of outstanding shares.
The investor previously said it would not support the deal if the purchase price remained at $13 per share.
Rovinescu said his company was "very pleased to have received Letko Brosseau's strong endorsement for our transaction."
Preserving Air Transat brand
The initial bid was announced in June, and will go to the shareholders for a vote on Aug. 23. The deal also needs to secure approval from regulators, including Transport Canada and the Competition Bureau.
Air Canada said it plans to preserve the Transat and Air Transat brands and maintain the Transat head office.
Its higher bid comes as Transat has been fending off a rival bidder, the Montreal developer Group Mach, which attempted to block the tour operator's sale to Air Canada.
Transat called on regulatory authorities to bar the real estate company from scooping up a plurality of Transat shares in a bid to derail the pending acquisition by Canada's biggest airline.
Regulator blocks Group Mach offer
Group Mach had offered $14 per share — an eight per cent premium over Air Canada's initial $13-per-share purchase agreement.
Transat spurned Group Mach's effort earlier this summer. The group has since been trying to secure at least 6.9 million, or 19.5 per cent, of the company's Class B shares at a cost of about $97 million.
As of Monday, Quebec's securities regulator has barred the Group Mach offer, citing "clear abuse" of capital markets by the real estate investor.
The Montreal-based company is not allowed to acquire any shares under its scheme and is expected to return promptly to shareholders any stocks already deposited.
Group Mach chief executive Vincent Chiara questioned the judgment of Transat's board, calling its endorsement of the original Air Canada bid "disturbing."
"They still need to be accountable to shareholders on why they pushed that $13-per-share offer like they pushed it," Chiara told The Canadian Press.
"God knows had we not did what we did, this deal was done at 13 bucks. There was no other offer. So Air Canada was going to walk away paying $200 million less to this company than they should have or could have."