Air Canada and Transat A.T. Inc. conclude amended transaction for combination of two companies

Air Canada announced today that it has concluded an amended transaction with Transat A.T. Inc. that provides for Air Canada to acquire all the issued and outstanding shares of Transat and for its combination with Air Canada. Under the binding agreement, unanimously approved by the Board of Directors of Transat, Air Canada will acquire all shares of Transat for $5.00 per share, payable at the option of Transat shareholders in cash or shares of Air Canada at a fixed exchange ratio of 0.2862 Air Canada share for each Transat share (representing a price for the Air Canada shares of $17.47). The value of the transaction is approximately $190 million.

The amended transaction
reflects the unprecedented impact of COVID-19 upon the global air transport
industry, which has endured a severe decline in air travel since the initial
Arrangement Agreement between Air Canada and Transat was concluded and approved
by Transat shareholders in August 2019. The
transaction remains subject to shareholder approval, court approval, the
approval of the Toronto Stock Exchange, certain customary and other conditions,
and regulatory approvals including the ongoing approval process of regulatory
authorities in Canada and the European
Union. If such approvals are obtained and conditions are met, the
transaction is expected to be completed in late January or early February 2021.

“COVID-19 has had a devastating
effect on the global airline industry, with a material impact on the value of
airlines and aviation assets. Nonetheless, Air Canada intends to complete its
acquisition of Transat, at a reduced price and on modified terms,” said
Calin Rovinescu, President and Chief Executive Officer of Air Canada. “This
combination will provide stability for Transat’s operations and its
stakeholders and will position Air Canada, and indeed the Canadian
aviation industry, to emerge more strongly as we enter the post-COVID-19
world.”

The Transat Board of Directors
has unanimously determined that the amended transaction is in the best
interests of Transat and its stakeholders, and is recommending that Transat
shareholders vote in favour of the transaction. In addition, each of the
directors of Transat has entered into a voting support agreement pursuant to
which each of them has committed to vote in favour of the transaction. Each of
National Bank Financial and BMO Capital Markets has provided the Transat Board
of Directors with an opinion to the effect that, as of the date thereof, the
consideration to be received by holders of Transat shares with respect to the
transaction was fair, from a financial point of view, to such holders, in each
case subject to the respective limitations, qualifications, assumptions and
other matters set forth in such opinions.

The transaction will be
implemented pursuant to a court-approved plan of arrangement under the Canada
Business Corporations Act. The new price of $5.00 per
share represents a premium of 31.6% over the 20-day volume weighted average
price (VWAP) of Transat shares on October 8, 2020.

All dollar amounts in this news
release are in Canadian currency.

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