Onex Buys WestJet For $5 Billion, Will Take It Private
Bruce Parkinson, Open Jaw
Canadian equity firm Onex has finally got its airline. WestJet has announced it has entered into a definitive agreement that provides for its acquisition by Onex in an all-cash transaction valued at $5 billion including assumed debt.
Onex, the company headed by Gerry Schwartz, has long invested in the aviation industry, and is known for its 1999 failed attempt to buy and merge Air Canada and Canadian Airlines.
Under the terms of the agreement, Onex Corporation will acquire all outstanding shares of WestJet for $31.00 per share, after which WestJet will operate as a privately-held company. The purchase price represents a 67% premium to Friday's closing share price and a 63% premium to WestJet's 20-day volume-weighted average trading price.
"Since our first flight in 1996, WestJet has been singularly focused on providing better options for the Canadian travelling public and this transaction retains that commitment," said Clive Beddoe, WestJet's Founder and Chairman.
"I am particularly pleased that WestJet will remain headquartered in Calgary and will continue to build on the success that our 14,000 WestJetters have created. Onex' aerospace experience, history of positive employee relations and long-term orientation makes it an ideal partner for WestJetters, and I am excited about our future."
In 2004 Onex bought Boeing’s Kansas and Oklahoma manufacturing facilitiesIn January 2007, Onex signed a deal to acquire the Raytheon Aircraft Company, forming Hawker Beechcraft. In 2012, Onex took a 50% stake in aircraft lessor BBAM and invested $75 million in aircraft leasingfirm FLY Leasing. It also has a stake in airline caterer Sky Chefs.
"WestJet is one of Canada's strongest brands and we have tremendous respect for the business that Clive Beddoe and all WestJetters have built over the years,” said Tawfiq Popatia, a Managing Director at Onex. “WestJet is renowned internationally for its unparalleled guest experience and employee culture. We're thrilled to be partnering with WestJetters and continuing this remarkable Canadian success story."
Ed Sims, WestJet's President and Chief Executive Officer, said, "We are delighted to continue the journey of building an airline based on a growing network, providing competitive airfares and more choice to, from and within Canada, for communities large and small. Integral to this relationship is a commitment to our employees, and our unique ownership-driven culture."
Following an approach by Onex in March 2019, the WestJet board of directors formed a special committee of independent directors to provide the Board with its advice and recommendations with respect to the proposal from Onex and the transaction, and to supervise the negotiation of the terms and conditions of the transaction. After an extensive review of the proposed transaction, the special committee provided a unanimous recommendation of the transaction to the WestJet board of directors.
The Board has determined that the transaction is in the best interests of WestJet and unanimously recommends that WestJet shareholders vote in favour of the transaction at the special meeting of shareholders to be held to approve the transaction.
Assuming the timely receipt of regulatory approvals, WestJet says the transaction is expected to close in the latter part of 2019 or early 2020.
WestJet expects to mail an information circular in late JUN 2019 for a special meeting of its shareholders expected to be held in JUL 2019 to approve the transaction.
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.