Friday morning at a hotel in downtown Montreal, shareholders will meet to decide the fate of one of the world’s largest integrated tour companies, with the future of aviation in Canada firmly in their hands.
Shareholders of Transat are being asked to vote on a proposal to sell their stakes in the company to Air Canada in an all-cash deal worth around $720 million.
Despite Transat’s largest shareholder, Letko, Brosseau and Associates, approving the deal once Air Canada raised its offer by $5 a share, others in Quebec’s business community have come forward to oppose the sale, arguing it’s not in Montreal’s – or the province’s – interests.
The most recent to come forward was Pierre-Karl Péladeau, Quebec entrepreneur and Transat shareholder, urging the deal be defeated. He said he had lined up “solid investors” to make an offer once the Air Canada offer was rejected.
Two-thirds of Transat shareholders have to approve the sale for it to become official.
In response to Péladeau’s move, the Transat board reiterated its approval of the sale.
“Essentially,” said the company in a news release this week, “as no other offer has been received, our Shareholders have the choice between on the one hand, receiving $18 in all-cash consideration for each Transat share they hold, or on the other hand, bearing the risks associated with the implementation of Transat’s strategic plan.”
Transat is in the midst of a transition to an all-Airbus fleet, purchasing A321LR aircraft. The company has faced significant challenges in recent years, with more people booking flights without staying at Transat resorts, and stiff competition forcing fares down across the Atlantic.
If the merger goes ahead, Air Canada, Transat and its partners in the Star Alliance will hold almost two-thirds of the transAtlantic market.
Federal Transport Minister Marc Garneau has until the end of the month to decide if he will launch a public interest review into the merger – a likely step considering Garneau used the process to approve Air North’s fusion with Canadian North, over objections from the Competition Bureau.