AVIATION INDUSTRY

Quebec firm Group Mach takes on Air Canada with higher bid for Transat

Quebec real estate developer Group Mach Inc. has outbid Air Canada by offering a $527.6-million takeover proposal for tour operator Transat AT Inc. which includes trying to convince the Quebec government to finance nearly one-quarter of the purchase.

The $14 per share offer comes after Transat announced last month it was in exclusive 30-day negotiations to be acquired by Air Canada for $13 per share or about $520 million.

Trading in Transat shares was halted all day Tuesday. The shares closed at $11.84 on the Toronto Stock Exchange on Monday.

Mach said the proposal is the culmination of a process that began when it approached Transat in January.

Under its offer, Mach committed to keep Transat’s head office, executive team and decision-making hub in Montreal — all essential, it said, if the Montreal developer hopes to get the $120 million in financing it seeks from Quebec.

Mach chief executive Vincent Chiara told The Canadian Press he aims to continue Transat’s current business operations, with no layoffs or selloffs planned.

“The airline, for now, is definitely an integral part of that business,” he said Tuesday. “It’ll be important to keep that…The business plan is to get the passengers to their destinations, selling packages which include the hotel portion.”

Key to the deal would be proposed minority partner TM Grupo Inmobiliario, a Spanish real estate developer that would roll over its three hotels in Mexico to Transat, according to Mach.

TM would contribute about $15 million in cash in exchange for a minority equity stake in Transat after the proposed agreement closed, Mach said. That would cover the $15-million break fee — built into the Air Canada arrangement — that Transat would incur by accepting the higher bid…

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