While Air Canada was ready to buy Transat last year for $ 720 million, the two carriers finally agreed on Saturday for a transaction amounting to just $ 190 million, considering the drop in air traffic due to the pandemic.
The previous purchase offer had already been approved by Transat executives, but the materialization of the agreement had been on hold for a few months because of the coronavirus crisis.
However, if the agreement was not concluded before the end of the year, it would be completely canceled. In the current context, Transat executives say they understood that it was impossible to seal the agreement according to the provisions laid down last year.
“With a forecast drop in volume of 66% globally at the end of 2020, it goes without saying that the world has changed profoundly since the signing of the original convention in June 2019,” Jean-Marc explained in a statement. Eustache, President and CEO of Transat, following the new agreement on Saturday.
Under this new agreement, Air Canada would therefore have to acquire each share issued by Transat at a cost of $ 5, and not $ 18, as initially planned.
Transat nonetheless indicated that this purchase price represented a premium of 31.6% based on the 20-day weighted value of the share.
The new transaction needs to be approved by at least two-thirds of Transat’s shareholders at a special meeting scheduled to take place in early December.
For it to officially come into force, the agreement must also receive the approval of regulatory authorities in Canada and the European Union.
This recent agreement must have received all the necessary approvals before February 15, otherwise the two parties will have to renegotiate the agreement.
Faced with an unprecedented crisis, Transat will be able to use a loan of $ 250 million by then, it was also announced in a press release on Saturday.