Sunday,  June 13, 2021  12:45 pm

The investors that are no longer interested in acquiring Transat

The investors that are no longer interested in acquiring Transat
Michael Pihach

Michael Pihach is an award-winning journalist with a keen interest in digital storytelling. In addition to PAX, Michael has also written for CBC Life, Ryerson University Magazine, IN Magazine, and Michael joins PAX after years of working at popular Canadian television shows, such as Steven and Chris, The Goods and The Marilyn Denis Show.

Following the termination of the proposed acquisition of Transat by Air Canada, much attention has been given to other suitors who may be next in line to acquire the Montreal-based company.

Quebecor President and CEO Pierre Karl Péladeau has made the bulk of headlines, having previously offered to purchase Transat AT for $5 per share (which amounts to roughly $190 million) through his investment company Gestion MTRHP.

It appeared to be a potential option, at first, given that Transat, in a press release on Apr. 2, the day their deal with Air Canada fell apart due to EU scrutiny, said it was open to discussions with possible acquirers, including Mr. Péladeau (who also goes by his initials “PKP”)

Quebecor President and CEO Pierre Karl Péladeau. (Quebecor)

That was up until two days ago when Transat’s largest shareholder, Peter Letko, in an interview with the Globe and Mail, announced that he was not interested in “giving the company away” at the price offered by Mr. Péladeau.

Air Canada’s offer was an attractive one because it was for cash and stock in the company, said Mr. Letkoadding that he would not sell shares at PKP’s price.

No longer interested

But PKP hasn’t been the only contender to enter the Transat-buying ring.

There were two others that had previously expressed interest in Transat AT – this being Montreal-based developer Groupe Mach, which bid for a block of shares in 2019, and Dominik Pigeon, head of FNC Capital, which also expressed interest in bidding with a group of investors in 2019.

In separate interviews with the Financial Post this week, both parties confirmed that they are no longer interested in a deal.

READ MORE: PKP says his offer to buy Transat is "still valid" after Air Canada deal falls apart

What about WestJet? There was certainly lots of speculation, once upon a time, that the Calgary-based airline would attempt a Transat takeover.

But to be clear: WestJet never formally entered any bidding process (and was actually quite critical of the Air Canada-Transat merger to begin with, citing concerns around competition). 

Meanwhile, Transat really needs money. The company says it needs $500-million in long-term financing on top of a $250-million credit facility that expires on June 30.

READ MORE: Transat's largest shareholder not interested in “giving the company away” to PKP

Mr. Letko, who is vice-president of Letko Brosseau and Associates and owns about 13 per cent of Transat’s shares, said Transat should be fine without an acquirer just as long as it receives support from the federal government.

When will that happen? Your guess is as good as mine. 

Ottawa is still in negotiations with Canada’s airlines in establishing sector-specific aid and the talks have reportedly been thiiiiiis close to being complete for months now. 

Speaking to media this week, Transat spokesperson Christophe Hennebelle confirmed that the discussions are, indeed, now at an “advanced” stage.

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