Canada’s Air Transat reacts to Péladeau’s withdrawal

Tour operator Transat AT has been caught off-guard by the public announcement on May 14 of media mogul Pierre Karl Péladeau that he is no longer interested in buying its airline Air Transat (TS, Montréal Trudeau). Péladeau, the chief executive officer and controlling shareholder of Quebecor Inc., on May 14 told the group-owned Journal de Montréal that he was walking away following a disagreement with Transat’s main shareholder, Letko, Brosseau & Associates Inc., over the airline’s valuation. Letko believes Transat is worth more than the CAD5.00 Canadian dollars (USD4.12) a share offered by Péladeau. “I do not agree with his assessment,” he said. “I’m no longer interested. If I make a new offer, I know it’s not going to get through. What’s the point of making one when you know the biggest shareholder is going to refuse?” he said. Transat AT, in reaction, said it had taken note of Péladeau’s public statements but had not received any formal communication on this matter. According to Transat AT, discussions with Péladeau had continued until May 13, 2021, about his non-binding offer made on April 7, 2021. Under its terms, Péladeau proposed to acquire all of the shares of Transat for CAD5.00 per share, payable in cash. “Although this proposal required a response within two days, the parties have from that date and until May 13, 2021, continued their discussions on the basis of this proposal and it has been thoroughly reviewed by a special committee of independent directors responsible for evaluating any proposal to acquire the Transat shares with the assistance of financial and legal advisors,” Transat AT said in a statement. On April 29, 2021, Transat announced it had reached an agreement with Ottawa to borrow up to CAD700 million (USD578 million) in additional liquidity through the Large Employer Emergency Financing Facility (LEEFF). This would allow the airline to plan for the resumption of its operations and the implementation of its strategic plan for the coming years, it said. According to Le Journal, Péladeau had criticised Transat AT for failing to present his previous two offers for the company to shareholders. He had intended to make the purchase on a personal basis, not through Quebecor. Letko vice president, Peter Letko, told The Globe and Mail last month he would not sell his shares to Péladeau for CAD5.00 cash, as that would amount to “giving the company away.” Air Canada (AC, Montréal Trudeau) in April 2021 called off a CAD180 million (USD148 million) takeover of Transat citing antitrust hurdles posed by the European Commission.