Air Canada ups its bid $200 million for Air Transat purchase

By Canadian Press	
		In the news today August 12				Aug 12 2019

By Canadian Press In the news today August 12 Aug 12 2019

"But it happened after consultations with Transat's major stockholders, including Letko Brosseau, with whom we are now announcing a lockup agreement", Hennebelle said in a phone interview.

The new $18 a share offer from Air Canada is significantly higher than Groupe Mach's suggested price and will no doubt be extremely attractive to Transat.

Group Mach had offered $14 per share in an effort to derail a pending acquisition of the company by Air Canada.

Air Canada will, therefore, be able to count on the support of Transat's largest shareholder at the shareholders' meeting scheduled for August 23.

Transat shares were up $4.91 at $16.70 in early trading on the Toronto Stock Exchange on Monday.

Air Canada announced on August 11 that Transat shareholder Letko Brosseau and Associates backed the revised C$720 million deal, which raises the purchase price from C$13 to C$18 per share. 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.

"God knows had we not did what we did, this deal was done at 13 bucks. So Air Canada was going to walk away paying $200 million less to this company than they should have or could have". "We look forward to joining forces with a proven and successful player in our highly competitive and complex industry" said Jean-Marc Eustache, president and chief executive officer of Transat. "But I've got to admit this is a real offer".

An increase in the break fee payable by Transat from $15 million to $40 million in case of termination of the agreement in certain circumstances, including upon acceptance of a superior proposal that is not matched by Air Canada. "We think there will be support from shareholders".

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"The deal is still not a foregone conclusion", he added.

Its chief executive Vincent Chiara has said he aims to then vote against Air Canada's offer, which needs at least two-thirds support from shareholders.

Air Canada said it plans to preserve the Transat and Air Transat brands and maintain the Transat head office.

PenderFund Capital holds about 3% of shares in Transat, according to Pandya and Refinitiv data, exceeded by only three other shareholders.

"We view the take-out price is rather generous given Transat's volatile profitability profile", said analyst Mona Nazir of Laurentian Bank Securities in a note to investors.

"Given the substantially higher bid by Air Canada and the decision of the Tribunal, the noise surrounding Group Mach's proposal has all but disappeared", Nazir added.

While Air Canada and Transat signed off on their definitive agreement in late June, there were still hurdles to overcome, including regulatory approval and also a green light from shareholders.

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