Air Canada’s takeover of domestic competitor Air Transat has come up against another obstacle. Yesterday, Canadian businessman Pierre Karl Péladeau published a press release urging his fellow Air Transat shareholders to vote against the CAD $720 million deal when it goes for shareholder approval on 23rd August.
As reported by ATW Online today, the Air Canada-Air Transat merger deal faces fresh complications following a statement by 1.6% Air Transat stakeholder Pierre Karl Péladeau.
The former politician and billionaire CEO of Quebecor Inc. published a press release on Facebook yesterday, encouraging Air Transat shareholders to vote against the Air Canada-Air Transat merger.
“Pierre Karl Péladeau …will vote against the transaction proposal because it goes against the best interests of the company, its employees, Quebec consumers and the Quebec economy,” Péladeau’s statement said.
He also says it would have a stifling effect on competition as Air Canada would control 60% of the Canadian air market if the deal goes through.
Since we first broke the news of the potential Air Canada-Air Transat merger back in May, there have been a number of twists in what seemed a simple plot at first. An eleventh-hour bid by Quebec real estate developer Mach Group Inc. in early June was the first spanner in the works.
By August, Air Canada had fought off the competition. The airline reportedly secured the backing of Air Transat’s largest shareholder, Letko Brosseau, who owns 19.3% of the company.
Brosseau opposed the deal at first but was swayed by Air Canada’s increased bid which boosted the payout per share from CAD $13 to CAD $18. After increasing their bid by nearly 40% earlier this month, the deal looked to be finally complete.
But yesterday brought yet another headache for Air Canada in the form of Pierre Karl Péladeau.
What happens now?
Although Pierre Karl Péladeau’s call to action hasn’t changed anything as far as the deal itself goes, it could have a ripple effect among Air Transat’s shareholders.
The airline released a statement today reiterating its support for the Air Canada deal as it stands, despite Péladeau’s comments.
“Transat’s Board and the special committee of the Board… continue to unanimously reiterate that the Arrangement with Air Canada is in the best interest of Transat and its stakeholders,” the statement says.
This begs the question of what alternative outcomes Air Transat shareholders could expect if they vote no on Friday’s ballot. The vote requires support from two-thirds of Air Transat’s shareholders. If it does not pass, the take over in its current form won’t go ahead.
What is Péladeau’s next move?
Global News suggested yesterday that Péladeau is in the process of seeking partners with which to table his own counter-offer to the Air Canada deal. But today’s Air Transat press release refutes that claim, stating that “no offer to acquire Transat has been made by Mr. Péladeau or any of his business associates.”
As the week progresses, we should get a better idea of what alternatives Air Transat’s shareholders can expect. But at the moment nothing concrete has materialized and the Air Canada-Air Transat merger seems no closer to completion than it was back in May.
Air Canada was not available following Simple Flying’s request for comment.