Air Transat shareholders approve takeover by Air Canada

Transat AT Inc.’s shareholders approved a revised purchase offer from Air Canada despite the disclosure of a late, higher-priced competing bid.

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The Montreal-based tour operator’s shareholders voted in a virtual meeting on Tuesday after the $5 per share offer was recommended by the company’s leadership.

Alternative offer

Transat disclosed in a press release before the shareholder meeting that in late November it received an unsolicited offer from a private investor outside the air transport and travel industry.

The unidentified investor was allowed to conduct due diligence with full access to the company’s financials, Transat said. Ultimately, however, Transat’s board concluded that the new offer was not better than Air Canada’s despite being a higher price.

On a call with reporters, Transat president and CEO Jean-Marc Eustache said price was only one factor among many that the company considered in evaluating offers.

Jean-Yves Leblanc, Transat’s lead independent director, said the fact that the investor was outside the travel industry, as well as the degree of certainty that the deal would close, contributed to the devaluation of the alternative offer.

The deal with Air Canada is expected to close in early 2021 following regulatory approval.

Desjardins analyst Benoit Poirier said in a memo that news of the alternative offer is positive for Transat, as it could provide some support for the company’s shares if the Air Canada purchase is not approved by regulators.

Preserving cash

Eustache told reporters that the company would be able to continue on its own if the deal wasn’t approved, but said that it would need financing and that it risked becoming even smaller as larger carriers gain market share.

Transat had been preparing for an uncertain future, taking steps this year to preserve cash amid a huge decline in revenue.

Transat reported last week that it lost $238.1 million attributable to shareholders in the fourth quarter. That brought its losses for the year to $496.5 million on 96-per-cent drop in revenues to $1.3 billion.

In October, Air Canada’s offer price was brought down to $5 from $18, reflecting the new market reality for travel-related industries since the start of the pandemic.

“It must be said that the world has changed” since Air Canada made its initial buyout proposal last year, Eustache said.

Transat’s shares gained 93 cents, or 17.6 per cent, to close at $6.22 on the Toronto Stock Exchange. Air Canada shares rose 24 cents, or 0.9 per cent, closing at $26.34.

CBC