Montreal real estate developer Group Mach is again offering Transat A.T. shareholders $14 per share, this time in an effort to scoop up 19.5 per cent of the airline's shares in order to block its sale to Air Canada.
The offer represents an eight per cent premium over Air Canada's $13 per share offer that was approved by Transat's board in June. Group Mach hopes to secure “at least” 6.9 million Class B shareholders at a cost of about $97 million.
Group Mach CEO Vincent Chiara says that it believes Air Canada under-values Transat, that its sale process to Air Canada was flawed and that Air Canada's offer creates uncertainty for Transat employees and its head office.
“I think Air Canada's offer is unhealthy,” Chiara said in an interview with The Canadian Press. “I think that Transat's board has mismanaged the process and that it is a bad transaction.”
Obtaining just under the 20 per cent of shares would trigger Transat A.T.'s shareholder rights plan, the purpose of which is to provide protection from an unsolicited offer.
Transat A.T. spokesman Christophe Hennebelle said in an email that the company's special committee will examine the Mach offer before making recommendations to shareholders. He urged shareholders to hold off on taking any action until then.
Air Canada had not commented by late Friday afternoon on Mach's offer which expires Aug. 13.
Transat's shares gained 44 cents or 3.8 per cent to $11.99 in Friday trading on the Toronto Stock Exchange.
Transat had not studied the previous offer of $14 per share before agreeing to Air Canada's $520-million bid.
Shareholders are to vote on the Air Canada offer on Aug. 23. It requires approval from two-thirds to go through, and faces resistance from major Transat shareholders who feel the price is too low. It also needs to secure approval from regulators, including Transport Canada and the Competition Bureau.
Letko, Brosseau and Associates and PenderFund Capital Management, which control about 22.06 per cent of Transat shares, have said they would vote against the agreement if the purchase price remained at $13 per share.
The Quebec Federation of Labour's Solidarity Fund is the second-largest shareholder with a 11.56 per cent stake, while the Caisse de depot et placement du Quebec holds 5.84 per cent.
“I have spoken with major shareholders (of Transat) and we have support (in our approach),” said Chiara, who did not name the supportive shareholders.
Mach has also pledged not to submit a proposal superior to that of Air Canada “as long as Transat's current board is in place.”
Chiara declined to say if he wants to replace the tour operator's administrators in the event that is able to block the Air Canada transaction.
The Mach leader said his latest proposal was fully funded.
In the proxy circular sent to its shareholders for the Aug. 23 vote, Transat A.T. raised doubts about the real estate group's ability to meet its commitments, particularly in terms of financing.
“We will rectify this in due course,” said Chiara, when asked about the content of the document. “We do not intend to leave that unanswered, rest assured. People at Transat made comments knowing they were inaccurate. ”
As part of its offer, Air Canada says it intends to preserve the Transat and Air Transat brands and to maintain the Montreal head office of the Quebec tour operator, which has some 5,000 employees. However, there is no firm commitment to this effect in the filings with regulatory authorities.
If Transat A.T. accepts a competing bid, a break fee of $15 million would be paid to Air Canada, which will nevertheless have five days to match a higher bid. If the transaction does not proceed, Air Canada will have to pay up to $40 million to Transat.