By Wings Staff
Air Canada has agreed to increase the purchase price for the acquisition of all issued and outstanding shares of Transat, from $13 to $18 per share, which brings the value of the all-cash transaction to approximately $720 million.
As part of the new price, which included amending the original Arrangement Agreement dated June 27, 2019, Air Canada has also entered into a lock-up and support agreement with Transat’s largest shareholder, Letko Brosseau & Associates Inc., which controls 19.3 per cent of all issued and outstanding shares of Transat.
Under the terms of its Lock-up and Support Agreement, Letko Brosseau has agreed to support and vote all of the Class B voting shares of Transat it controls at the Special Meeting of Shareholders of Transat on August 23, 2019, in favour of Air Canada’s acquisition of Transat.
Amendments to the Arrangement Agreement between Air Canada and Transat were unanimously approved by the Board of Directors of Transat and its Special Committee. In addition to the increased purchase price, the Amending Agreement also includes 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. The Superior Proposal must be equal to or exceed $19 in cash per share.
“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 at the Special Meeting of Shareholders of Transat,” said Calin Rovinescu, president and CEO of Air Canada. “We are therefore very pleased to have received Letko Brosseau’s strong endorsement for our transaction. We know this achieves the best possible outcome for all stakeholders.”
Rovinescu continued to explain that Air Canada intends to preserve the Transat and Air Transat brands and maintain the Transat head office and its key functions in Montreal. “The Quebec economy will derive maximum advantage of having a Montreal-based, growth-oriented global champion in aviation, the world’s most international business, spurring more employment and securing Montréal’s position as a leader among world aviation centres,” added Rovinescu.
Jean-Marc Eustache, president and CEO of Transat, said, “This fully funded cash transaction is the ideal platform for Transat’s continued presence and growth in Montreal. We look forward to joining forces with a proven and successful player in our highly competitive and complex industry.”