Transat AT Inc.’s shareholders approved a revised purchase offer from Air Canada, despite the late, high – cost competitive effort.
The Montreal-based tour operator’s shareholders voted in a virtual meeting on Tuesday after the company’s leadership recommended a $ 5 per share offer.
Transat revealed in a press release before the shareholder meeting that it received an unsolicited offer from a private investor outside the aviation and travel industry in late November.
Transat said the unidentified investor was allowed to run the company with proper diligence with full access to the funds. However, despite the high price, Transat’s team decided that the new offer was no better than Air Canada.
In a call with reporters, Jean-Marc Eustach, president and CEO of Transat, said price was one of the factors the company considered in evaluating offers.
Jean-Yves LeBlanc, a leading independent director of Transat, said the fact that the investor was out of the travel industry and that he was confident the deal would end contributed to the devaluation of the alternative offer.
The agreement with Air Canada is expected to expire in early 2021 following regulatory approval.
Desjartins analyst Benoit Fourier said in a memo that the news of the alternative offer was favorable to Transat because it would provide some support for the company’s shares unless approved by Air Canada’s purchasing controllers.
Eustace told reporters that the company could continue on its own if the deal was not approved, but that it would need funding and that it would become even smaller as large carriers gain market share.
Taking action this year to save money amid a sharp decline in revenue, Transat was preparing for an uncertain future.
Transat reported last week that it lost $ 238.1 million due to shareholders in the fourth quarter. It had lost $ 496.5 million a year, a 96 percent drop in revenue to $ 1.3 billion.
In October, Air Canada’s offer price was reduced from $ 18 to $ 5, reflecting the new market reality for travel-related businesses since the outbreak began.
Eustach said Air Canada has “said the world has changed” since introducing its initial acquisition plan last year.
Shares of Transat were up 48 cents, or 9.1 percent, at $ 5.77 in afternoon trade on the Toronto Stock Exchange.