Air Canada Is Planning To Buy Out Air Transat In A Massive $520 Million Deal
Air Canada made an official announcement today that it is in exclusive talks to acquire Transit A.T. Inc (Transat).
Air Canada made an official announcement today that it is in exclusive talks to acquire Transit A.T. Inc (Transat). A press release from the company reports that Air Canada has entered into an exclusive agreement with Transat to discuss the potential purchase of all shares of Transat and its combination with Air Canada.
According to Air Canada's press release, the proposed buyout would be valued at approximately $520-million (or $13 per share of Transat on a fully-diluted basis). If the acquisition goes forward, the deal would in the expansion of the Montreal-based global travel services operating across Canada and internationally.
Air Canada has secured the funding needed to complete the transaction, which is reportedly not subject to financing conditions.
Calin Rovinescu, President and Chief Executive of Air Canada, stated in the press release, "A combination with Transat represents a great opportunity for stakeholders of both companies."
"This includes the shareholders of both Transat and Air Canada, employees of both companies, who will benefit from increased job security and growth prospects, and Canadian travellers, who will benefit from the merged company's enhanced ability to participate as a leader in the highly competitive leisure travel market globally."
He added, "The acquisition presents a unique opportunity to compete with the very best in the world when it comes to leisure travel. It will also allow us to further grow our hub at Montréal-Trudeau Airport, where we have added 35 new routes since 2012 to the benefit of the Montreal and Quebec communities, and from which we carried 10 million customers in 2018 alone."
The press release notes that until the transaction's conditions are finalized, there is no guarantee that the transaction will be completed.
Although Air Canada claims that customers will ultimately benefit from the takeover, critics aren't so sure. Some claim that since Canadian aviation isn't very competitive, customers will likely get the short end of the stick if one of Air Canada's major competitors becomes eliminated from the market. This could lead to higher airfare and less money in consumers' pockets.