Insiders Claim AC Looking To Forfeit Acquisition Of Transat
Anna Kroupina, Open Jaw
The COVID-19 pandemic may derail Air Canada's acquisition of Transat, say sources privy to behind-the-scenes discussions.
The insiders claim AC is hoping the federal government will block it from merging with its competitor, reports TVA Nouvelles.
It's a transaction on which Air Canada was very bullish as little as a few months ago. Last AUG, Air Canadaincreased its offerto buy Transat from $13 per share to $18, nearly 40% or $200 million more. The company was ready to raise $720 million to get its hands on the Quebec flagship, markedly beating out Groupe Mach's offer of $14 per share.
Even back in MAR, shortly after the COVID-19 outbreak was declared a pandemic by the World Health Organization, Bloomberg reported investors doubted whether the transaction will go through when Transat shares fell as much as 46% below purchase price.
At the time, when a shareholder asked TS CEO Jean-Marc Eustache about the stock price drop at the company’s annual meeting, Eustache said there’s no particular reason for the share collapse and pointed to the broad sell-off in airlines and tourism stocks. He said he expects the deal to go through as agreed, Bloomberg reported on 12MAR, 2020.
Air Canada did not clarify its intentions when contacted by TVA Nouvelles about the current speculation.
"Regarding Transat, as we mentioned during the unveiling of our financial results for the first quarter of 2020 on May 4, the regulatory assessment process is ongoing and we have no update to provide at this stage," a spokesperson told TVA via email.
To date, the transaction has not received the green light from Transport Canada and last month,European regulators announced they are launching an "in-depth" investigation into Air Canada's proposal to buy Transat amid concerns the deal may hamper competition and result in higher prices.
A federal government decision on the transaction is expected soon. The Ministry of Transport did not immediately respond to questions from TVA Nouvelles.
Anna Kroupina Journalist
Anna is OJ's newest member and she joins the team as a writer/reporter. She co-writes the daily news and covers events. Although she's new to the industry, pursuing a career path in travel/tourism has been a goal since her first family road trip to the Florida Keys sparked a desire to discover the world and this exhilarating, fast-paced industry.
Horace Springer- June 3, 2020 @ 10:24
Transat should remain as it has been over the years as a profitable airline offering reasonable pricing.H7