Air Canada’s plan to purchase tourism provider Transat AT cleared its first regulatory hurdle by gaining approval from Quebec’s superior court.
The court heard no objections to the application, Air Canada said in an announcement reporting the milestone on 29 August. The takeover bid must also clear scrutiny from Canada’s Competition Bureau.
A 95% majority of Transat's voting shareholders approved the agreement for Air Canada to buy the parent company of Air Transat for C$18 ($13.53) per share, which would make the cash transaction worth C$720 million. Air Canada, that nation's largest airline, has promised to maintain Transat employees and headquarters in Montreal. The carrier has said that passengers would benefit from more destinations, connections and frequencies under the combination.
The Montreal-based carrier expects the transaction to close in 2020, pending further regulatory approvals and closing conditions. The carrier in a previous announcement specified the deal may close in “early 2020”, but that timeline has been questioned after an 26 August announcement revealed that regulator Transport Canada could take until 2 May to consider how the transaction will affect the public interest. The assessment will include consultation scheduled to begin 4 November with the aviation industry and related stakeholders to weigh economic benefits and challenges associated with the takeover.
Air Transat, which specializes in vacation packages, would continue to operate flights under its own brand after the deal closes. Transat offers vacation packages, hotel stays and air travel to 60 destinations in the Americas and Europe, which could give Air Canada Rouge a chance to counter tourism packages from competitors including Canada's second-largest carrier Air Canada.
Air Canada firmed an agreement to acquire Transat AT on 27 June. Montreal real estate developer Group Mach made a previous bid to acquire Transat, which was blocked by the Quebec Administrative Court of Financial Markets on the grounds that it was "abusive" and aimed at preventing the Air Canada takeover.