Shareholders of Air Transat (TSX:TRZ) have approved a takeover by Air Canada (TSX:AC) that is expected to be finalized in early 2021.
Transat AT Inc.’s shareholders voted in a virtual meeting after the $5-per-share offer was recommended by the company’s leadership. Transat disclosed before the shareholder meeting that, in late November, it received an unsolicited offer from a private investor outside the air transport and travel industry.
The unidentified investor was allowed to conduct due diligence with full access to the company’s financials, Transat said. Ultimately, however, Transat’s Board of Directors concluded that the new offer was not better than Air Canada’s despite being a higher price per share.
Transat President Jean-Marc Eustache told shareholders that price is only one factor among many that the company considered in evaluating offers.
Jean-Yves Leblanc, Transat’s lead independent director, said the fact that the investor was outside the travel industry, as well as the degree of certainty that the deal would close, contributed to the devaluation of the alternative offer.
The deal with Air Canada is expected to close in early 2021 following regulatory approval. Air Transat says that it will be able to continue on its own if the Air Canada deal isn’t approved but said that it would need financing and that it risked becoming even smaller as larger carriers gain market share.
Transat had been taking steps this year to preserve cash amid a huge decline in revenue. Air Transat reported last week that it lost $238.1 million attributable to shareholders in the fourth quarter. That brought its losses for the year to $496.5 million on a 96% drop in revenues to $1.3 billion.
In October, Air Canada’s offer price for Air Transat was lowered to $5 from $18, reflecting the new market reality for travel-related industries since the start of the pandemic. Air Transat’s shares gained 93 cents, or 17.6% to close at $6.22 on the Toronto Stock Exchange. Air Canada shares rose 24 cents, or 0.9% closing at $26.34.