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Air Canada’s Transat Buyout Could Be Renegotiated Over COVID-19

By  |  May 3, 2020

Air Canada’s (AC) CA$720 million (US$517 million) purchase of tour operator Transat AT is fuelling jitters among some investors who would like to see the deal renegotiated with the aviation industry in turmoil due to COVID-19, two sources familiar with the matter told Reuters.

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    Air Canada secured Transat shareholders’ approval for the deal last year with a sweetened CA$18.00 a share bid, to bolster its leisure business. On Friday, May 1, Transat shares were trading 44% below AC’s offer price. 

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    Air Canada, like many of its global peers, has slashed flights, suspended financial forecasts, and sought government aid as the industry deals with its worst slump. 

    “There is no way the deal should proceed as structured,” said Norman Levine, managing director of Portfolio Management Corporation, who does not own either of the two stocks. 

    “The whole world has changed in the airline/travel business and valuations from when the deal was announced to today bear no resemblance to each other,” he added. 

    The turmoil has also given Air Canada reasons to weigh its options.  “All options are on the table – the board is still deciding on what’s the best way forward,” one of the sources said.

    Full Content: Reuters

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