Air Transat shareholders urged to vote against Air Canada deal


Quebecor Inc. chief Pierre Karl Péladeau is urging key Air Transat A.T. shareholders to vote against Air Canada’s proposed bid, suggesting that he has a team ready to make an offer if the deal falls through. “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 said in an Aug. 19 statement. “It is, as a whole, contrary to the public interest.” Shareholders are set to vote Aug. 23. Péladeau is urging the Air Transat parent company's three largest shareholders, Letko Brosseau, Fonds de solidarité FTQ, the Caisse de dépôt et placement du Québec, to vote against the deal on Aug. 23. The three hold about 35% of the shares—just enough to derail the deal. The agreement needs 66% shareholder approval to pass. If the deal falls through, Péladeau and a team of partners “would be ready to promptly discuss with the board of directors of the company and to work with it to conclude a final proposal at a fair price and in the best interest of Air Transat, its employees, Quebec consumers and the Quebec economy,” he said. Finalizing an offer would require some “due diligence,” he added, in part to access proprietary details about Air Transat. Air Transat reminded shareholders that the only options on the table for the Aug. 23 vote are the Air Canada deal—a “yes” vote—or “bearing the risks associated with the implementation of Transat’s strategic plan” by rejecting Air Canada’s offer. “Since the execution of the arrangement agreement with Air Canada, Mr. Péladeau or any other interested party could have made an offer to Transat, in the manner specifically provided for in the arrangement agreement. The process contemplated permits the offeror under any qualifying offer to undertake the necessary due diligence. Transat has not received any such offer to date,” Transat said in a statement. “There is currently no concrete alternative transaction on the table.” Péladeau said Air Canada’s offer of C$18 ($13.60) per share does not do enough to protect jobs at Quebec City-based Air Transat and its affiliated businesses. “Air Canada will have to rationalize certain activities, causing job losses in Quebec,” he said. Despite all the promises made by Air Canada—and taking into account the business practices and requirements of the financial markets—[Péladeau] anticipates, as in so many other similar situations in Quebec over the last 20 years, the closure of the head office.” As an example, he cited former Air Canada maintenance arm Aveos, which shut down in 2012 and was liquidated. Air Canada has said Air Transat will keep its Quebec headquarters. The deal also concentrates too much of Canada’s airline industry in one entity, Péladeau, a former politician and the son of Quebecor founder Pierre Péladeau, argued. “If the transaction were accepted by the Competition Bureau and the Government of Canada, being a direct competitor of Air Transat for the vast majority of transatlantic routes and ‘sun destinations,’ Air Canada would concentrate more 60% of the market, an unacceptable threshold in some industries,” he added. “The transaction would thus deprive consumers of price competition while they are generally lower on Air Transat’s side.” Air Canada and Air Transat agreed to a tentative deal May, at $C13 per share. But Letko Brosseau, the company’s largest shareholder at 19%, said it needed a higher valuation. Air Canada came back at C$18 per share, and Letko Brosseau pledged to support the deal. 


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