October 23, 2020 By The Canadian Press
Shares of Chorus Aviation surged 34 per cent after it confirmed receiving an acquisition proposal from an unnamed third party.
The Halifax-based regional aviation company said in a brief news release Friday that it had received “a preliminary, non-binding acquisition proposal from a third party that is subject to a number of significant conditions.”
Chorus shares, which had been halted in trading, closed up 81 cents to $3.18. That’s still a big drop from about $8 before the COVID-19 pandemic caused a massive loss in demand due to travel restrictions.
Chorus said there’s no assurance a transaction will occur and said it doesn’t intend to comment further unless there is a deal to announce.
Walter Spracklin of RBC Dominion Securities Inc. said he’s not surprised that Chorus is a takeover target because of its unique business model and resilient cash flow streams from the fixed-fee nature of revenues.
Spracklin suspects the interested party is likely a Canadian-domiciled financial sponsor rather than a strategic buyer given the weakened state of the global airline industry and foreign ownership restrictions.