Air Canada has hiked its purchase price for Air Transat's parent by nearly 40%, adjusting the figure to C$18 per share from the previous C$13.

The decision increases the value of the acquisition – an all-cash transaction – to C$720 million ($544 million).

Air Canada's significant modification of the price is intended to secure the "necessary level of support" from shareholders, says the carrier.

The airline has been particularly keen to obtain backing from Transat AT's largest shareholder, Letko Brosseau, which holds just over 19% of the company.

Letko Brosseau has entered a lock-up agreement as part of the revised price agreement, and will use its voting stock to support the takeover.

Air Canada chief executive Calin Rovinescu says the carrier is "very pleased" to have received the backing.

"We know this achieves the best possible outcome for all stakeholders," he adds. "For shareholders of Transat and Air Canada, the combination delivers excellent value, while also providing increased job security for both companies' employees through greater growth prospects."

Air Canada had been facing a rival bid – offering a higher price of C$14 per share – from Quebec property firm Group Mach, which emerged a couple of weeks before an arrangement agreement between Air Canada and Transat AT, apparently sealing their tie-up, was unveiled on 27 June.

Transat AT chief Jean-Marc Eustache says the subsequent shareholder talks and the resulting higher bid from Air Canada will provide "added stability".

"This fully funded cash transaction is the ideal platform for Transat's continued presence and growth in Montreal," he says.

"We look forward to joining forces with a proven and successful player in our highly-competitive and complex industry."

Under the revised deal Transat AT would face a higher penalty – a total of C$40 million rather than C$15 million – if it chose to break the deal and opt for a superior proposal unmatched by Air Canada. Such a proposal would have to equate to C$19 per share or more.