AC Teams With TD, CIBC & Visa Canada In Hostile Bid For Aeroplan

Bruce Parkinson, Open Jaw

Things just got very interesting in the Canadian airline loyalty space, as Air Canada unveiled a hostile bid to buy back Aeroplan in a deal said to be valued at $2.25 billion.

Under the proposal, AC would be part of a consortium including the Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and Visa Canada seeking to acquire Aimia’s loyalty business, including roughly $2 billion worth of Aeroplan points obligations, for $250 million in cash. The total purchase price is valued at approximately $2.25 billion.

The move comes just over a year after Air Canada said it would part ways with the program once its contract ended in 2020 in order to start its own loyalty, frequent flyer program. 

Air Canada released a statement yesterday saying that it will continue with plans to start its own program and that the potential acquisition of Aeroplan would allow for a seamless transfer of miles from one program to another.

Aimia’s board has a 2AUG deadline to respond to the offer, which the consortium said was worth the equivalent of $3.64 per share — a 46% premium on its closing price of $2.50 Tuesday. But in the wake of the announcement, the share value rose over 35%, closing yesterday at $3.39. Those shares had lost more than 70% their value since Air Canada said it was ending its agreement.

Air Canada created Aeroplan as in-house loyalty program in the 1980s but it was spun off as an independent business in 2005 as part of a court-supervised restructuring of Canada’s largest airline. 

Financial analysts were taken by surprise with the hostile bid, but generally positive about its prospects for the airline, saying it would make for a smooth transition and ensure significant initial uptake for its own program for its scheduled 2020 launch date.

Bruce Parkinson

Bruce Parkinson Editor-in-Chief

An observer and analyst of the Canadian and international travel industries for over 25 years, Bruce uses the pre-dawn hours to prepare a daily news and information package to keep industry members up to date.

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