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Air Canada reaches deal to acquire Air Transat parent

Air Canada has reached a definitive agreement to acquire Air Transat's parent, with an unanimous vote in favour of the deal by Transat's board.

Air Canada's cash purchase of outstanding Transat stock at C$13 ($9.90) per share is estimated at C$520 million and still requires approval from regulators and shareholders. The two companies expect to close the deal in "early 2020".

"Travellers will benefit from the merged companies' enhanced capabilities in the highly competitive, global leisure travel market and from access to new destinations, more connecting traffic and increased frequencies," says Air Canada chief executive Calin Rovinescu.

Quebec-based real estate developer Group Mach had also made a formal bid on 13 June to acquire Transat AT at a price of C$14 per share. The tourism company's business strategy through 2022 has been to invest in its hotels in the Caribbean and Mexico. This includes the purchase of land near Cancun with the aim of opening a new resort there in 2020. Transat offers vacation packages, hotel stays and air travel for 60 destinations in the Americas and Europe. The deal would give Air Canada Rouge a chance to counter WestJet tourism packages and help the mainline Air Canada expand its global network.

Air Transat in May took delivery of the first of 15 Airbus A321LRs as part of its fleet renewal programme to replace older aircraft including six A310s it has in service. The A321LRs will be deployed on its longer international flights to Europe and the Caribbean, along with Central and South America.

Transat decided on Air Canada's proposal at the advice of a special committee of independent directors it formed to evaluate the bid formally submitted in May. Air Canada has retained Morgan Stanley as its financial advisor and Stikeman Elliott LLP as its legal advisor. Transat has retained National Bank Financial as financial advisor and Fasken as legal advisor.

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