Transat shareholders approve Air Canada takeover, deal now in regulators’ hands
Shareholders voted 95% in favour of deal evaluated at $720MChristopher Reynolds | CBC News
The fate of Air Canada’s $720-million takeover bid for Transat A.T. Inc. rests with regulators after shareholders overwhelmingly approved the acquisition offer Friday.
In a special meeting, shareholders of the Quebec-based tour operator voted 94.77 per cent in favour of accepting the $18-per-share transaction from the country’s largest airline.
The deal will narrow the field of airline competition, securing for Air Canada about 60 per cent of the Canadian transatlantic market and helping the company maintain a firm hold on Montreal air travel.
The takeover is expected to face intense scrutiny from the Competition Bureau and other regulatory authorities, including in Europe. Transat said it expects the deal to close early next year.
“Today, we are very confident that we will get the approval of these different regulatory authorities,” Transat board member Jean-Yves Leblanc said at a news conference, citing “the best advisers that we can have on this planet.”
Chairman and chief executive Jean-Marc Eustache, who co-founded Transat’s predecessor in the early 1980s, tamped down fears of higher fares on flights to Europe.
“I have 42 years’ experience in that field. I never saw the price going up,” he told reporters, pointing to competitors on the Montreal-Paris route such Air France, Level Airline and Corsair International.
“Plenty of competition, there’s no problem with that.”
While the price of Caribbean flights remains relatively low among ample competition from budget airlines such as Sunwing Airlines Inc. and WestJet Airlines Ltd. subsidiary Swoop, the consumer cost of transatlantic travel threatens to slide upward.
“If you are interested in travelling to Rome, London or Paris, the price is going up, because Air Canada and Transat really control this market,” said Michel Nadeau, executive director at the Institute for Governance of Private and Public Organizations.
“The temptation will be to boost the price.… Up to now it’s possible to buy a ticket to Paris or London for less than $1,000, but there’s a danger that after the transaction the price will go above $1,000,” Nadeau said.
Both Air Canada and Transat are headquartered in Montreal, and worries persist around Transat’s head office over potential job losses.
“While imperfect, this transaction could allow Transat to be included in a larger group, thus allowing it to better deal with growing international competition. It is now up to Air Canada to seize the opportunity to increase jobs and economic spinoffs in Quebec,” the Quebec Labour Federation Solidarity Fund — the investment arm of the province’s largest labour group — said in a statement.