The proposed deal will see Air Canada purchase all outstanding shares of Transat A.T. for $13 per share. "This represents the best prospect for not only maintaining, but growing over the long term the business and jobs that Transat has been developing in Quebec and elsewhere for more than 30 years".
Transat AT Inc.is in exclusive talks with Air Canada, which is offering $13 per share to buy the travel company.
- This winning combination will support jobs and economic development, open up the world and better position Quebec and Canada as a world leader in air travel, tourism, aviation and innovation. If Air Canada is successful to acquire Air Transat it will solidify Air Canada's portfolio of business including the tour operator which is something air Canada maybe has not as well as Air Transat.
Comparing a one-way flight to Barcelona, for example, Air Transat offers a cheaper seat but charges $55 for your first bag compared to no baggage fees for your first bag on Air Canada Rouge.
The transaction remains subject to the finalization of definitive agreements, according to Air Canada.
- Air Canada's Quebec roots and presence throughout Canada make Air Canada the ideal partner to oversee the combination of Transat employees.
Air Canada's shares hit an all-time high of more than $35 in May, because of carrying more passengers and its new loyalty program, and in spite of dealing with the grounding of its Boeing 737 Max fleet.
Any agreement will also contain numerous conditions customary for this type of transaction, including applicable regulatory approvals and the approval of the shareholders of Transat.
Letting the biggest player, Air Canada, gobble up an even bigger chunk of those markets would certainly draw attention from Canada's Competition Bureau - its mandate is to ensure takeovers don't stifle the market for consumers. Transat's biggest single shareholder is Montreal-based investment firm Letko Brosseau and Associates, which owns 6.5 million shares, or about one sixth of the company. Transat A.T. Inc has previously mentioned that it intends to sell Air Transit to a Quebec-based company.
To Toronto-Dominion Bank analyst Tim James, the inclusion of that line "suggests, not surprisingly, that Air Canada would not likely continue with Transat's Caribbean hotel investment initiative". Thus, Air Transat could easily be merged into Air Canada's low-priced arm, Air Canada Rouge. Already, Air Canada must lease some aircraft to cover routes until the 737 MAX is ready to fly again.
"Air Canada's plan is to grow and this is part of their growth strategy", Moore said in an interview.
This comes only days after Westjet announced that it is being acquired by Onex Corporation and thereby going private.
Coming after that move, the timing of Thursday's Transat news is no coincidence, Cieszynski said.
Other would-be buyers could yet emerge.
Transat says that after being solicited by several parties, its board has determined that it's in the interests of Transat and its stakeholders to finalize negotiations on an exclusive basis with Air Canada.