Canada’s Transat clarifies Quebecor proposal

The Board and special committee of the Board of Transat, supported by their financial and legal advisors, have reiterated their unanimous recommendation that Air Canada’s planned takeover of the struggling Montreal-based tour operator and its airline Air Transat (TS, Montréal Trudeau) is “fair and in the best interests of the company”. In a statement on January 12, Transat reacted to what it labeled as incorrect and misleading media reports that Gestion MTRHP Inc., the investment firm of Pierre Karl Péladeau, Chief Executive Officer of Canadian media and telecommunications giant Quebecor, on December 22 had made a higher offer per share for Transat in the event that regulatory authorities rejected the Air Canada bid. Canadian media reported that Péladeau had sent three letters to Transport Minister Marc Garneau calling for a rejection of the merger with Air Canada, promising to pay CAD223 million Canadian dollars (USD174.8 million) representing CAD6 (USD4.70) a share or 20% more than Air Canada to purchase Transat, in order to guarantee competition and fairer prices for Canadian travellers. The CAD180 million (USD141.1 million) deal with Air Canada is expected to close in early 2021 following approval from European and Canadian regulators, the European decision deadline being February 9. This follows after 91% of Transat shareholders on December 15 approved a purchase offer from Air Canada that had been brought down from CAD18 (USD14.11) to CAD5 (USD3.92) per share, reflecting the new market reality for travel-related industries since the start of the COVID-19 pandemic. The arrangement also received the final approval of the Superior Court of Québec on December 18, 2020. In a letter dated December 31, 2020, Péladeau claimed Transat’s board had declined his offer in an email on December 14, the night before shareholders approved the revised Air Canada offer. In reaction, Jean-Yves Leblanc, president of the special committee of the Board of Directors of Transat on January 12 said: “This offer, without demonstrated committed financing, appears designed to attempt to adversely influence the regulatory approval process by suggesting that an alternative exists, should the regulatory authorities choose to reject the arrangement between Transat and Air Canada. We continue to believe that Air Canada’s proposal continues to be the best option for Transat’s future, especially in the context of the pandemic and its devastating effect on airlines.” Setting the record straight, Transat said: “Contrary to media reports, MTRHP’s current proposal is actually for CAD5 per share (not CAD6); the proposal lacks binding, fully committed financing or evidence of sufficient cash on hand for the purpose of making the acquisition; (and) the proposal lacks financing to support Transat’s 2021 working capital requirements of approximately CAD500 million (USD392.8 million).”