Monday,  May 25, 2020  3:48 am

Transat and Air Canada say purchase negotiations still on

  • Air
  •   06-05-2019  10:33 am

Transat and Air Canada say purchase negotiations still on

Following yesterday’s $1 billion dollar bid for Transat by Quebec’s Groupe Mach, both Transat and Air Canada say they will continue to negotiate a purchase deal.

READ MORE: And then there were two: Groupe Mach makes billion-dollar bid for Transat

The two airlines issued separate statements yesterday afternoon (June 4), after real estate firm Groupe Mach indicated that it would bid $14 per share for ownership of Transat, a billion-dollar offer and nearly twice the $520 million valuation of Air Canada’s offer. In its purchase bid, Groupe Mach (which said that it had initially approached Transat in January regarding a purchase) stipulated that Transat immediately discontinue its current purchase discussions with Air Canada.

The proposal

The offer by Groupe Mach includes a proposal to involve Spain-based hotel developer TM Grupo Inmobiliario, the largest residential and leisure real estate developer in Spain and preferred hotel supplier of Transat in Mexico, in exchange for a minority equity stake in Transat, approximately $15,000,000 in cash and roll-over of its three operating hotels in Mexico with approximately 1,000 rooms under the well-established banner of The Fives Hotels and Residences into Transat's platform.

In its statement, Transat said that it “would like to reiterate that it has entered into an agreement with Air Canada, pursuant to which it has agreed to a 30-day binding period of exclusive negotiations, beginning upon the commencement of a formal due diligence review. During this exclusivity period it is contemplated that Air Canada will complete its due diligence review and the parties will finalize the negotiation of a definitive agreement regarding the acquisition of all of the shares of Transat. This exclusivity period expires towards the end of June 2019.”

The company also added that “there is no assurance that a definitive agreement will be reached in relation to any proposed transaction.”

Air Canada stated that it is “in the process of finalizing its binding agreement to purchase all of the issued and outstanding shares of Transat AT Inc. and its combination with Air Canada to create an industry leading, Quebec-based leader in the global leisure travel industry. Air Canada announced on May 16, 2019 that it had entered into an exclusive agreement with Transat regarding the proposed transaction and that the agreement was subject to Air Canada completing a 30-day due diligence period now expected to be complete towards the end of June.”

According to Transat, its operations continue in their normal course and there will be no change for its clients, suppliers and employees. In particular, travellers and clients of Transat can continue to travel and book their flights and vacation packages with Transat as usual, the company added.

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