Another shakeup in Canada’s airline industry.
Air Canada (TSX:AC) has announced that it is buying rival Air Transat (TSX;TRZ) for $13.00 a share. The two airlines had announced in May they were in negotiations toward a possible deal and gave themselves 30 days to hammer out the details.
That period expired on Wednesday, and on Thursday morning the companies announced a deal that would see Air Canada buy Transat A.T. Inc. for $13.00 per share, which values the company at $520 million.
The plan is to maintain the two companies as separate entities, maintaining the two different brands, head offices and key functions in Montreal, the companies said in a news release.
Transat CEO Jean-Marc Eustache said the deal represents "the ideal platform for Transat's presence and jobs in Montreal, and therefore represents the best option for all our stakeholders: employees, suppliers, partners and shareholders."
While the merger of the two Montreal-based airlines has the blessing of both companies' management teams, shareholders and regulators still must approve the deal. The purchase of Air Transat would consolidate Canada's airline industry into fewer hands.
Air Canada's rival, WestJet (TSX:WJA), has agreed to be purchased by buyout firm Onex Corp. (TSX:ONEX) for $5 billion.
