The company that owns Air Transat has agreed to be taken over by Air Canada for $13 a share.
The two companies announced in May they had entered negotiations toward a possible deal, and gave themselves 30 days to hammer out the details.
That period expired on Wednesday, and on Thursday morning they announced a deal that would see Air Canada buy Transat A.T. Inc. for $13 per share, which values the company at $520 million.
The plan is to maintain the two companies as separate entities, maintaining the two different brands, head offices and key functions in Montreal, the companies said in a release.
“This combination delivers excellent value, while also providing increased job security for both companies’ employees through greater growth prospects,” Air Canada CEO Calin Rovinescu said.
Transat CEO Jean-Marc Eustache said the deal represents “the ideal platform for Transat’s presence and jobs in Montreal, and therefore represents the best option for all our stakeholders: employees, suppliers, partners and shareholders.”
That’s a veiled reference to another, ostensibly better financial offer on the table for the company. Once word of Air Canada’s interest emerged in May, Montreal real estate developer Group Mach declared it would also be interested in buying Transat, for a higher price of $14 a share.
Shareholders, regulatory agencies still hurdles
Mach reiterated their interest and desire in entering negotiations as recently as this week, but Thursday’s news suggests Air Transat’s management has no interest in pursuing that option.
While the merger of the two Montreal-based airlines has the blessing of both companies’ management teams, it is not necessarily a done deal.
Shareholders will have to weigh in and regulatory agencies will have a say, as the move would consolidate Canada’s airline industry in even fewer hands, against the backdrop of more upheaval in the industry. Air Canada’s rival, WestJet, has agreed to be purchased by buyout firm Onex Corp. for $5 billion.