Aimia Rejects Takeover Bid By Air Canada & Partners
Bruce Parkinson, Open Jaw
Aimia Inc. has rejected the proposal from Air Canada, The Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, and Visa Canada Corporation to acquire its Aeroplan loyalty business. The parties had set yesterday as the deadline for Aimia to accept the proposal.
Air Canada and its partners say that they enhanced the offer and engaged in extensive discussions with Aimia over the past several days to attempt to reach an economically viable agreement.
The Globe and Mail reports that the AC group raised its initial bid for the loyalty plan to $325-million, from $250-million. But Aimia demanded $450-million, according to the loyalty rewards company.
Aimia argued that neither the original bid nor the higher offer “reflects the value of the Aeroplan business to members and stakeholders,” according to a statement.
“The proposal would have ensured value and continuity for Aeroplan members as well as customers of Air Canada, TD, CIBC and Visa,” Air Canada said in a statement. “As previously communicated, it would have also allowed Aeroplan Miles to transfer into Air Canada's new loyalty program in 2020, providing convenience and value for millions of Canadians.”
The 25JUL proposal was for a total consideration of $2.25 billion, including $250 million in cash and the assumption of approximately $2 billion of Aeroplan points liability. The proposal implied an estimated market equivalent value of $3.64 per Aimia share, a 52.3% premium to the 30-day average and a 45.6% premium to the spot closing price as of 25JUL.
The bid comes a year after AC unveiled plans to launch its own loyalty program, a move that caused Aimia shares to lose 63% of their value in a single day. Aeroplan contributes almost 80% of Aimia’s earnings and most of that comes from Air Canada.
AC’s current partnership contract with Aimia and Aeroplan expires in July, 2020.
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.