Earlier this week, it was reported that Quebec businessman and telecom owner Pierre Karl Péladeau had called on the Canadian government to block the sale of Air Transat and that Mr. Péladeau was offering Transat $6 per share, or approximately $233 million, to acquire the Montreal-based tour operator.
On paper, it sounds like a better deal as Air Transat shareholders, in December, accepted a takeover bid from Air Canada in a deal worth $5 per share or $180 million.
But not so fast. According to Transat, there are items in Mr. Péladeau's proposal that were inaccurately reported, as the company is now speaking out to clarify several points.
In a release issued Tuesday (Jan. 12), the Montreal-based tour operator noted that Mr. Péladeau’s unsolicited Dec. 22 proposal from investment firm Gestion MTRHP Inc. is not supported by binding, fully committed financing.
It was also reported that Péladeau’s proposal would remain open for a period of 24 hours in the event of a rejection of the current arrangement with Air Canada.
“These reports may mislead some investors into believing that there is an offer from Mr. Pierre Karl Péladeau's investment firm…” reads Transat’s release.
Setting the record straight
Transat then goes on to “set the record straight,” clarifying the following three points about Mr. Péladeau’s proposal:
- Contrary to media reports, MTRHP's current proposal is actually for $5.00 per share (not $6.00).
- The proposal lacks binding, fully-committed financing or evidence of sufficient cash on hand for the purpose of making the acquisition.
- The proposal lacks financing to support Transat's 2021 working capital requirements of approximately $500 million.
"This offer, without demonstrated committed financing, appears designed to attempt to adversely influence the regulatory approval process by suggesting that an alternative exists, should the regulatory authorities choose to reject the arrangement between Transat and Air Canada,” said Jean-Yves Leblanc, president of the special committee of the Board of Directors of Transat.
“We continue to believe that Air Canada's proposal continues to be the best option for Transat's future, especially in the context of the pandemic and its devastating effect on airlines.”
The story so far
The Air Canada-Transat transaction has yet to receive a green light from the European Union, which has been delaying their decision to approve the proposed purchase.
The European Commission, which oversees competition policy in the 27-member European Union, is studying the deal to determine if it will hinder competition, increase prices and lead to fewer choices for consumers.
In March, the Competition Bureau of Canada was unfavourable to the transaction, but it should be noted that their analysis was done before the COVID-19 pandemic outbreak.
Transat's Board and special committee reiterated their unanimous recommendation that the arrangement with Air Canada is "in the best interests of Transat" and its stakeholders.
Transat shareholders approved the arrangement by 91 per cent of the votes cast on Dec. 15. 2020.
The arrangement also received the final approval of the Superior Court of Québec on December 18, 2020.
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