(Bloomberg) -- Air Canada said it’s in exclusive talks to buy one of the country’s largest travel tour operators, Transat A.T., for about C$520 million ($387 million) amid a wave of consolidation in the Canadian airline industry.
The country’s largest airline said in a statement it was prepared to pay C$13 a share for the Montreal-based company, a 23 percent premium to Transat’s closing share price Wednesday. The offer is more than double Transat’s price on April 30 when it announced it was in talks with at least one potential buyer.
The move comes just three days after Air Canada’s rival WestJet Airlines Ltd. agreed to be acquired by Canadian private equity firm Onex Corp. for C$3.5 billion in cash. The offer from Toronto-based Onex was at a 67 percent premium to WestJet’s stock price.
"A combination with Transat represents a great opportunity for stakeholders of both companies," said Calin Rovinescu, Air Canada’s chief executive officer, in the statement. "The acquisition presents a unique opportunity to compete with the very best in the world when it comes to leisure travel. It will also allow us to further grow our hub at Montréal-Trudeau Airport."
Transat jumped 16 percent to C$12.22 at 10 a.m. in Toronto. Air Canada rose for a fifth day, adding 1.3 percent to a record high of C$39.37.
Transat said last month it planned to launch a strategic review, including a potential sale, after being approached by several interested buyers. It said Wednesday that during the 30-day exclusivity period it planned to continue its operations as normal.
Any finalized deal would be subject to a C$15 million breakup fee, and Transat would be able to withdraw from the exclusivity period if it received an unsolicited proposal at least C$1 a share higher than the Air Canada bid and wasn’t matched by the Montreal-based airline, it said.
A takeover of Transat by Air Canada would likely trigger an antitrust review by Canadian regulators, given the two companies have competing offerings. Air Canada noted its presence in Quebec and in the Montreal region in the statement, after the province’s premier voiced concerns about a potential sale of Transat last month.
Transat employs about 5,000 people and offers travel packages to 60 destinations in 25 countries in Europe and the Americas, according to its website. The company has annual revenue of almost C$3 billion.
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