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Jun 4, 2019

Going private would serve Transat better than Air Canada offer: Group Mach CEO

Why a real estate firm wants to purchase Air Transat


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Travel company Transat AT Inc. would be better served as a private company under a deal with Group Mach Inc. after being “penalized” in public markets, the CEO of the Quebec real estate developer said.

Vincent Chiara, president and CEO of Mach, said the Montreal-based tour operator could execute its long-term plan more easily as a private company rather than under the scrutiny of public markets.

“Transat has had a record of making money in the past. We think we can duplicate that,” Chiara told BNN Bloomberg’s Greg Bonnell on Tuesday.

“I think the current setting of a public company during its development of a new plan makes it very difficult and the market has shown that they’ve reacted negatively to Transat’s plan.”

Mach announced earlier on Tuesday the company made a conditional offer to buy Transat for $14 a share in cash with potential support from the Quebec government, topping a friendly proposal by Air Canada by $1 per share. Mach’s unsolicited proposal is worth more than $1 billion, including off balance sheet debt, the company said in a statement.

If Transat decided to accept Mach’s offer, it would not be the only Canadian firm in the travel industry opting to go private. Indeed, after WestJet Airlines Ltd. announced in May that it will be sold to Onex Corp. and taken private, the airline’s CEO Ed Sims warned against headwinds stemming from “short-term thinking” among public firms. 

Mach has vowed that no jobs will be lost in a potential deal while Transat’s head office would remain in Montreal, Chiara added.

“Our offer was made in consideration of the talks we’ve had with [the Quebec government] already,” he said. “Our plan is to continue Transat’s business as we know Transat today and to just increase its activities in the real estate market.”

Chiara also said that Mach won’t shut the door on a potential partnership with Transat and Air Canada.

“We’re open to discussions. The airline portion of Transat is important to get our passengers to destinations. Ultimately we want to build a hotel portfolio, but there’s more to this business than just a hotel,” he said.

“It’s important to operate or to make a deal to get those airline passengers to destinations.”