Air Canada (TSX:AC) is increasing its offer to buy Transat A.T. Inc.
Late Sunday, Air Canada announced that it has increased the total offer by $200 million to win the support of the Transat’s largest shareholder. The new bid sees Air Canada spending $18 per share, rather than $13. That brings the total offer to roughly $720 million, up from a previous bid worth $520 million.
With the revised offer, Air Canada now has the backing of Letko Brosseau and Associates Inc., Transat's largest shareholder, which holds just over 19% of outstanding shares. The investor previously said it would not support the deal if the purchase price remained at $13 per share.
Air Canada’s initial bid was announced in June, and will go to the shareholders for a vote on August 23. The deal also needs to secure approval from regulators, including Transport Canada and the Competition Bureau. Air Canada said it plans to preserve the Transat and Air Transat brands and maintain the Transat head office.
Its higher bid comes as Transat has been facing off against rival bidder, the Montreal developer Group Mach, at a securities tribunal hearing over Mach's move to block the tour operator's sale to Air Canada. Transat called on authorities to bar the real estate company from scooping up a plurality of Transat shares in a bid to derail the pending acquisition by Canada's biggest airline.
Group Mach had offered $14 per share -- an eight per cent premium over Air Canada's initial $13-per-share purchase agreement. Transat rejected Group Mach's effort earlier this summer. The group has since been trying to secure at least 6.9 million, or 19.5%, of the company's Class B shares at a cost of about $97 million.
Air Canada shares opened Monday up three cents to $44.50
