Air Canada has reached an exclusive agreement to acquire all issued and outstanding shares of Canadian tour operator Transat A.T in an all-cash deal valued at C$520m ($386.93m).
Transat is the parent company of Canadian leisure airline Air Transat, which serves 60 destinations in 25 countries.
The proposed combination is expected to a Montreal-based global travel services company in leisure, tourism and travel distribution with operations across Canada and internationally, Air Canada noted.
It will offer more destinations to passengers while promoting two-way tourism.
The agreement gives Air Canada a 30-day period of exclusive negotiations to finalise the negotiation of a definitive agreement for the transaction.
As per the terms of the agreement, Transat will have to pay Air Canada a C$15m ($11.16m) break fee if it walks away from the deal and opts for a superior offer.
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By GlobalDataIf the agreement is terminated due to the failure to secure regulatory or governmental approvals, Air Canada will be liable to pay a reverse break fee of up to C$40m ($29.76m).
Air Canada president and chief executive Calin Rovinescu said: “A combination with Transat represents a great opportunity for stakeholders of both companies. This includes the shareholders of both Transat and Air Canada, employees of both companies, who will benefit from increased job security and growth prospects, and Canadian travellers, who will benefit from the merged company’s enhanced ability to participate as a leader in the highly competitive leisure travel market globally.
“The acquisition presents a unique opportunity to compete with the very best in the world when it comes to leisure travel. It will also allow us to further grow our hub at Montréal-Trudeau Airport, where we have added 35 new routes since 2012 to the benefit of the Montreal and Quebec communities, and from which we carried ten million customers in 2018 alone.”
The completion of the transaction is subject to the finalisation of definitive agreements, confirmatory due diligence, and the receipt of regulatory and shareholder approvals.
The Canadian flag carrier provides scheduled passenger service directly to nearly 220 airports on six continents.
Transat agreed to the exclusive negotiations following a recommendation from a special committee of independent directors that was handed the task to examine any proposals for the acquisition of the shares of the company.
Air Canada’s takeover bid comes days after Onex agreed to buy Canada’s WestJet Airlines in a C$5bn ($3.71bn) deal, including assumed debt.
