Air Canada raises Transat purchase offer to C$720 million


Air Canada has also entered into a lock-up and support agreement with Transat's largest shareholder, Letko Brosseau & Associates Inc., who beneficially owns or has control or direction over approximately 19.3% of all issued and outstanding shares of Transat.

Transat spokesman Christophe Hennebelle said Air Canada's increased offer Sunday came after meetings with the tour company's biggest shareholders, which include the Fonds de Solidarite FTQ, the Caisse pension fund manager and PenderFund Capital Management.

Toronto-based Letko Brosseau and Associates owns 19 percent of Transat.

Transat in June accepted Air Canada's earlier all-cash bid of $13 a share, over a $14 per share offer from Group Mach.

The would-be deal sent Transat shares soaring by $4.96 or almost 42 per cent to close Monday at $16.77, their highest price in more than eight years.

Analyst Doug Taylor of Canaccord Genuity said Air Canada's bid "has a high potential of achieving the necessary shareholder support".

Transat's airline primarily ferries passengers in packaged vacations. One Transat official called the Groupe Mach effort "abusive, misleading and coercive".

"We are very pleased by the added stability brought about by Air Canada's increased bid as supported by Transat's largest shareholder, Letko Brosseau".

"They still need to be accountable to shareholders on why they pushed that $13-per-share offer like they pushed it", Chiara told The Canadian Press.

"If there's anything to take from all this it's that thank God Mach was there because we're the one that extracted the $18 price today", Buggé said.

Meanwhile a Quebec securities tribunal has cease traded an offer made by Groupe Mach Acquisition Inc. for 6.9 million class B voting shares of Transat.

Air Canada has enough cash on hand to cover the extra $200 million. Air Canada intends to preserve the Transat and Air Transat brands and maintain the Transat head office and its key functions in Montreal.

Rovinescu also touted the deal's impact on Quebec as a whole, saying the province's economy "will derive maximum advantage of having a Montreal-based, growth-oriented global champion in aviation, the world's most worldwide business, spurring more employment and securing Montreal's position as a leader among world aviation centres". Mach said it had no intention of launching any formal hostile takeover bid for all of Transat's voting shares.

The tribunal ruling, which says the bid "constitutes an abusive offer contrary to the public interest", means the Montreal-based company can not acquire any shares under its scheme and must return to shareholders any stocks already deposited. He wouldn't say whether Mach will buy Transat shares, saying: "All options are on the table".

"We could appeal the decision, but it's a bit theoretical", he said.

Transat is required to pay $40 million if it backs out of the agreement, an increase from the earlier breakup fee of $15 million, the statement added. It requires approval from federal transportation and competition regulators. We are therefore very pleased to have received Letko Brosseau's strong endorsement for our transaction.

Shareholders are scheduled to vote on the new offer next week.