Onex Corporation has completed its acquisition of WestJet, a transaction valued at approximately $5 billion including assumed debt.
The closing, announced this morning (Dec. 11), comes following the receipt of the final regulatory approval by the Canadian Transportation Agency of its determination under the Canada Transportation Act.
On Tuesday (Dec. 10), the Canadian Transportation Agency ruled that WestJet will continue to meet Canadian ownership and control requirements following its pending $3.5 billion acquisition by Onex Corp., moving the transaction another step closer to completion.
The ruling, announced by the CTA yesterday (Dec. 10), determined that the airline, along with its discount subsidiary Swoop, would remain Canadian provided Onex amends its bylaws to ensure any matters voted on by the board of directors are done with a majority of Canadian directors being present, as reported by The Canadian Press.
The agency’s seven-page ruling noted that Onex chairman and chief executive Gerry Schwartz holds at least 60 per cent of the voting interest in the company and is in a position to exercise voting control over Onex, including at shareholders' meetings, adding that “the agency finds that only Mr. Schwartz, a Canadian, will have the means to exercise control in fact over Onex and is satisfied that Onex will be controlled in fact by Canadians should the proposed transaction be executed as filed.”
Through subsidiary Kestrel Holdings Inc., Onex will have voting control of Kestrel Topco Inc., which will ultimately own and control WestJet and Swoop Inc., the CTA added.
Federal legislation limits foreign ownership of a Canadian airline to 49 per cent, with a maximum of 25 per cent for any one foreign investor. Onex, which managed $23.2 billion of invested capital as of Dec. 31, is a private equity firm whose funds include cash from foreign investors.
WestJet shareholders approved the proposed acquisition in July, with 92.5 per cent voting in favour.
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