Shareholders of Transat during a meeting on 23 August approved a proposal for Air Canada to acquire all its issued and outstanding shares, a deal that would give Canada's largest carrier opportunity to expand its global network.
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 chief executive Calin Rovinescu says in a statement on 23 August that the carrier will secure approvals to complete the transaction from regulators including Transport Canada and the Canadian Competition Bureau. The Montreal-based carrier aims to also secure court approvals and the other closing conditions with the goal of completing the transaction in early 2020.
"We will build a combined company greater than the sum of its parts that we can all be proud of," Rovinescu says, promising greater job security and growth opportunities for employees of both companies. "Air Canada plans to preserve the Transat and Air Transat brands and maintain the Transat head office and its key functions in Montreal."
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 WestJet.
WestJet, Canada's second-largest airline, is also pursuing a deal to become more competitive. The Calgary-based airline has secured approval from Canada's competition bureau and many of the other organizations necessary for it to be bought out by Onex Partners. That deal with Onex would eliminate the airline's debt and would give Canada’s second largest carrier the resources to focus on its expansion goals.
The Transat shareholder approval follows uncertainty throughout August about whether Air Canada could gain the necessary support for the deal.
The Quebec Administrative Court of Financial Markets on 12 August published a decision rejecting the only rival bid for Transat from Groupe Mach. The tribunal stated that while the Montreal-based real-estate developer's bid to acquire 19.5% of voting shares in Transat violated no laws it was "abusive to shareholders" because it was directed at blocking Air Canada.
A day before the tribunal decision was published, Air Canada on 11 August hiked its purchase price for Transat to C$18 per share from the C$13 it proposed in June. The hike was successfully directed at winning support from Transat's largest shareholder, investment firm Letko Brosseau & Associates, which holds 19% of the tour operator and supported the transaction.
Despite that price hike Quebec businessman Pierre Karl Peladeau vowed to vote his 1.6% stake in Transat against Air Canada's offer. Péladeau on his Facebook page said on 19 August that the deal would be "against the public interest" in part because it would give Air Canada 60% of the travel market for transatlantic routes and "sun destinations" for vacations.