Economy

Air Canada increases its bid for Air Transat by $200 million

Air Canada increases its bid for Air Transat by $200 million”

Air Canada also says it has entered into a lock-up and support agreement with Letko Brosseau & Associates Inc., Transat's largest shareholder, which owns or has control or direction over 7,277,104 Class B voting shares or approximately 19.3% of all issued and outstanding shares of Transat.

"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.

Toronto-based Letko Brosseau and Associates owns 19 percent of Transat.

Under the revised terms of the Air Canada deal, Transat will not consider any new unsolicited third party bids lower than $19 per share.

Transat in June accepted Air Canada's earlier all-cash bid of $13 a share, over a $14 per share offer from Group Mach.

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

Air Canada's odds of winning shareholder approval to buy Transat A.T. Inc. just got a whole lot better.

Transat's airline primarily ferries passengers in packaged vacations.

Transat spurned Group Mach's effort earlier this summer.

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

"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. 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".

Air Canada said it plans to preserve the Transat and Air Transat brands and maintain the Transat head office. "The Quebec economy will derive maximum advantage of having a Montreal-based, growth-oriented global champion in aviation, the world's most worldwide business, spurring more employment and securing Montréal's position as a leader among world aviation centres". But Mach is not counting out the idea of another bid.

The tribunal ruling, which says the bid "constitutes an abusive offer contrary to the public interest", means the Montreal-based company can not acquire any shares under its scheme and must return to shareholders any stocks already deposited.

"All options are on the table from now until shareholders meeting", Buggé said.

Mach disagrees with the tribunal's decision but will follow the orders, executive vice president Alfred Buggé said in an interview Monday. It prohibited Mach from buying shares under its proposal and ordered it to return any shares already deposited.

If Transat breaks off the Air Canada deal for a better offer, it agreed to pay a break fee of $40 million, up from $15 million.

Buggé put it more bluntly: "If Transat shareholders vote in favour of that deal, they are going to have to wait for many, many months before they see any money".

While the deal seems all but certain to be approved by Transat, Canadian regulators could still seek changes to the deal to guarantee competitiveness for consumers.



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