Transat Furious As Groupe Mach Launches Plan To Block AC Deal
Montreal real estate developer Groupe Mach is again offering Transat A.T. shareholders $14 per share -- this time in an effort to grab 19.5% of Transat shares in a bid to block its sale to Air Canada. Transat has responded angrily to the move, calling it “highly abusive, coercive and misleading.”
The offer represents an 8% premium over Air Canada's $13 per share offer that was approved by Transat's board in June. Groupe Mach hopes to secure 6.9 million Class B shareholders at a cost of about $97 million.
Groupe Mach CEO Vincent Chiara says that it believes Air Canada undervalues Transat, that its sale process to Air Canada was flawed and that Air Canada's offer creates uncertainty for Transat employees and its head office.
“I think Air Canada's offer is unhealthy,” Chiara told The Canadian Press. “I think that Transat's board has mismanaged the process and that it is a bad transaction.”
Obtaining just under 20% of shares would trigger Transat A.T.'s shareholder rights plan, the purpose of which is to provide protection from an unsolicited offer.
Early this morning, Transat responded furiously to the Groupe Mach move. It announced that it will file a complaint today with the Tribunal administratif des marchés financiers, regarding Groupe Mach Acquisition Inc.'s “highly abusive, coercive, misleading and conditional offer” to acquire 6.9 million Class B voting shares.
“By setting the mark just below the regulatory threshold of 20% of the outstanding Class B Shares, Mach is deliberately evading the take-over bid rules of Canadian securities laws designed to protect shareholders and afford them with a fair and equal treatment and sufficient time and information to make informed decisions,” a Transat statement reads.
Air Canada had not commented by late Friday afternoon on Mach's offer which expires 13AUG.
Transat's shares rose 44 cents or 3.8% to $11.99 in Friday trading on the Toronto Stock Exchange.
Shareholders are to vote on the Air Canada offer on 23AUG. It requires two-thirds approval to go through, and faces resistance from major Transat shareholders who feel the price is too low. The agreement would also require approval from regulators, including Transport Canada and the Competition Bureau.
Letko, Brosseau and Associates and PenderFund Capital Management, which control about 22.06% of Transat shares, have said they would vote against the agreement if the purchase price remained at $13 per share.
The Quebec Federation of Labour's Solidarity Fund is the second-largest shareholder with a 11.56% stake, while the Caisse de depot et placement du Quebec holds 5.84%.
“I have spoken with major shareholders (of Transat) and we have support (in our approach),” said Chiara, who did not name the supportive shareholders.
Mach has also pledged not to submit a proposal superior to that of Air Canada “as long as Transat's current board is in place.”
Chiara declined to say if he wants to replace the tour operator's administrators in the event that he is able to block the Air Canada transaction.
The Mach leader said his latest proposal was fully funded, rejecting doubts raised by Transat about the real estate group’s ability to meet its commitments in the proxy circular sent to its shareholders for the 23AUG vote.
“We will rectify this in due course,” said Chiara, when asked about the content of the document. “We do not intend to leave that unanswered, rest assured. People at Transat made comments knowing they were inaccurate. ”
If Transat A.T. accepts a competing bid, a break fee of $15 million would be paid to Air Canada, which will nevertheless have five days to match a higher bid. If the transaction does not proceed, Air Canada will have to pay up to $40 million to Transat.