The Tribunal administratif des marchés financiers (Québec) blocks Groupe Mach's Scheme

  • The Tribunal administratif des marchés financiers (Québec) blocks Groupe Mach's Scheme

The Tribunal administratif des marchés financiers (Québec) blocks Groupe Mach's Scheme

Air Canada and Transat command a combined 60 per cent slice of the transatlantic market from Canada, overlap on some sun destinations and maintain a firm hold on Montreal air travel.

Canada's largest airline and Transat, a budget airline and tour operator also headquartered in Montreal, announced Sunday that Transat's board unanimously supports Air Canada's new bid of $18 per share, a 38 per cent increase from its original offer of $13 per share or $520 million.

Meanwhile a Quebec securities tribunal has cease traded an offer made by Groupe Mach Acquisition Inc. for 6.9 million class B voting shares of Transat. The real estate developer offers $14 per share. "Mach is also forbidden from using any proxies associated with shares deposited under the scheme".

The decision comes one day after Air Canada upped its takeover offer by $200 million in an effort to win shareholder support for its bid to take Transat private.

Under the terms of the Lock-up and Support Agreement, Letko Brosseau has agreed to support and vote all of the Class B voting shares of Transat it controls at the August 23 Special Meeting of Shareholders of Transat in favour of Air Canada's acquisition of Transat.

Transat's stock price jumped 42 per cent to $16.75 on Monday. "We look forward to joining forces with a proven and successful player in our highly competitive and complex industry" said Jean-Marc Eustache, President and Chief Executive Officer of Transat.

"If it weren't for us, there would never have been a higher offer", Alfred Buggé, Mach's head of mergers and acquisitions, said in a telephone interview. It requires two thirds support, which would have been hard to cross without Letko Brosseau thanks to a competing proposal from Montreal-based developer Group Mach.

While Air Canada and Transat signed off on their definitive agreement in late June, there were still hurdles to overcome, including regulatory approval and also a green light from shareholders.

"All options are on the table from now until shareholders meeting", Buggé said. "The shareholder meeting is next week, so time is of the essence". It prohibited Mach from buying shares under its proposal and ordered it to return any shares already deposited.

The improved deal won't put much of a dent in Air Canada's finances.

Transat is required to pay C$40 million if it backs out of the agreement, an increase from the earlier breakup fee of C$15 million, the statement added. Quebec-based Groupe Mach had moved to purchase Transat for $14 a share, which prompted an outcry from Transat officials.

"The deal is still not a foregone conclusion", he added. "However, assuming only minor concessions on Air Canada's part, we think the transaction is a strong strategic fit with significant synergy potential". "For shareholders of Transat and Air Canada, the combination delivers excellent value, while also providing increased job security for both companies' employees through greater growth prospects".

Buggé put it more bluntly: "If Transat shareholders vote in favour of that deal, they are going to have to wait for many, many months before they see any money".