Aug 21, 2018
Air Canada group reaches deal to buy Aimia’s Aeroplan for $450M
An Air Canada-led consortium has reached a deal in principle to buy the Aeroplan loyalty program from Aimia Inc. for $450 million in cash, the companies said Tuesday.
Air Canada (AC.TO), along with Toronto-Dominion Bank (TD.TO), Canadian Imperial Bank of Commerce (CM.TO) and Visa Canada Corp. (V.N), will also assume approximately $1.9 billion in Aeroplan points liability as part of the transaction.
The deal was unanimously approved by Aimia’s (AIM.TO) board of directors and Mittleman Brothers, the Montreal-based company’s largest shareholder.
"We are pleased to see that an agreement in principle has been reached as Aeroplan members can continue to earn and redeem with confidence,” said Calin Rovinescu, president and CEO of Air Canada, in a statement.
“This transaction, if completed, should produce the best outcome for all stakeholders, including Aeroplan members, as it would allow for a smooth transition to Air Canada's new loyalty program launching in 2020, safeguarding their miles and providing convenience and value for millions of Canadians on behalf of the consortium.”
The transaction, which still requires a definitive agreement and Aimia shareholder approval, is expected to be completed by the fall this year, the consortium said.
Shares in Aimia were up more than 10 per cent at $4.23 on the Toronto Stock Exchange at 10:27 a.m. ET Tuesday.
The agreement in principle comes after Aimia rejected the Air Canada-led group’s sweetened $325-million offer in early August after initially offering $250 million, plus the assumption of $2 billion in points liabilities.
At the time, Christopher Mittleman, chief investment officer of the firm that bears his family’s name, said Aimia was correct to reject the “blatantly inadequate” bid for Aeroplan.
Canada’s largest airline announced last year that it would cut ties with Aimia and launch its own loyalty program after its contract expires in June 2020. Since then, Aimia has struck partnerships with other carriers, including Air Transat, Flair Airlines and Porter Airlines, all of which were announced this month.
The preliminary agreement to sell Aeroplan to Air Canada’s consortium raises questions over its potential impact on Aimia’s newly-struck partnerships.
Aimia spokesperson Tammy Smitham said in an email to BNN Bloomberg that a deal with the Air Canada-led group “was contemplated in the context of the recently announced deals with Porter, Flair and Air Transat and they obviously were only expected to come into play in 2020.”
“Pending a definitive agreement with Air Canada and the consortium, it is business as usual and not appropriate to comment further on these,” Smitham added.
Michael Deluce, executive vice president and chief commercial officer of Porter Airlines, said in a statement to BNN Bloomberg the carrier “recognized from the outset that Aeroplan may be purchased prior to its agreement taking effect in July 2020” and that it is not in a position to comment further until a definitive agreement is reached.
Air Transat Chief Distribution Officer Joseph Adamo said in a statement to BNN Bloomberg that the carrier is discussing next steps with Aimia.
"From the start of talks, we were well aware that this could be the eventual outcome. That’s why we planned to reach a final agreement with Aimia at a later date," Adamo said.
Aimia also recently said it was in talks with Oneworld alliance, whose members include Air Canada rivals like British Airways and Cathay Pacific.
“Oneworld remains ready to continue exploring ways of working with Aeroplan should the deal announced today not be concluded,” said Michael Blunt, vice-president of corporate affairs with Oneworld, in an email to BNN Bloomberg.
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