(Bloomberg) -- Air Canada’s proposed takeover of Transat AT Inc. has been thrown into jeopardy after European regulators failed to approve the deal by a Feb. 15 deadline.

The companies are still talking about “potential amendments” that can keep the deal alive, Montreal-based Transat said in a statement. However, Air Canada won’t agree to extend that deadline, meaning either company now has the right to walk away from the deal, Transat said.

Air Canada agreed to buy Transat, one of Canada’s largest travel tour operators, in June 2019 and later raised its bid to C$18 a share to win over some recalcitrant shareholders and seal a friendly deal.

Because the Covid-19 pandemic struck before the deal closed, both sides agreed last year to a dramatically lower price. Air Canada offered Transat investors the option of taking C$5 per share in cash or 0.2862 Air Canada shares, to give them the ability to participate if the airline industry recovers. The deal now has an equity value of about C$200 million ($158 million).

Canadian regulators approved the deal last week with conditions, including a requirement that Air Canada keep 1,500 employees in its leisure travel business, start new routes within five years and keep the Transat head office in Quebec.

But the European Commission hasn’t approved the deal yet and has requested additional information from the companies. Its decision is now expected in the first half of 2021.

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