Air Canada has agreed to a deal to acquire Air Transat. The flag-carrier will receive all the shares in the smaller airline for CAD 5 each. This is payable in either cash or shares to shareholders of Air Canada. The shareholders will receive this payment at an exchange ratio of 0.2862 for each Transat share.
The value of the transaction is around CAD 190 million, quite less than the offer agreed upon before
This offer is a sharp decline from the one agreed upon by Transat shareholders more than a year ago. Due to the impact of COVID-19 on the global aviation industry, the transaction was amended.
However, the transaction needs to be approved by stakeholders, court, and the Toronto Stock exchange along with other conditions. Even regulatory approvals need to be completed. This includes the ongoing process of regulatory authorities in Canada and the European Union.
If all these approvals are obtained, the transaction can be completed in late January or early February.
Calin Rovinescu, Chief Executive, Air Canada, said, “COVID-19 has had a devastating effect on the global airline industry, with a material impact on the value of airlines and aviation assets. Nonetheless, Air Canada intends to complete its acquisition of Transat, at a reduced price and on modified terms. This combination will provide stability for Transat’s operations and its stakeholders and will position Air Canada, and indeed the Canadian aviation industry, to emerge more strongly as we enter the post-COVID-19 world.”