MONTREAL (Reuters) - Transat AT Inc shareholders on Friday overwhelmingly voted in favor of Air Canada’s bid for the leisure group, in a deal that still requires domestic and European regulatory approval.
Air Canada offered C$720 million ($540.70 million), or C$18 a share, bid for the tour operator, which runs leisure carrier Air Transat. Air Canada sweetened its initial C$13 a share offer for Transat, locking up support from the tour operator’s largest shareholder Letko Brosseau.
Canada’s largest carrier said the Transat acquisition would bolster its leisure travel business after the deal closes, which is expected in 2020.
Despite offers from other rivals, including a Montreal real estate group, Transat Chief Executive Jean-Marc Eustache told shareholders that: “Air Canada’s offer was the only viable proposition.”
Quebec businessman and former politician Pierre Karl Peladeau had said he would vote against Air Canada’s offer and consider making a separate offer with partners if the deal fails. Peladeau owns a 1.6% stake in Transat.
The deal would give Transat a 60% market share of select transatlantic routes to and from Canada, and would require approvals from domestic and European competition regulators.
Transport Canada has until Wednesday to determine whether the deal raises issues of public interest, such as competition concerns and fares, which would require a formal assessment.
Eustache said there were never plans to sell Transat, but inquiries from Air Canada sparked questions about the company’s future as it struggled to compete against larger international carriers.
“The problem is the competition,” he said, which raised questions over whether Transat “would survive alone.”
Two other major shareholders, Quebec pension fund Caisse de depot et placement du Quebec, along with the Quebec Federation of Labor’s Fonds de solidarite, said in statements that they approved the deal.
In a statement, Air Canada CEO Calin Rovinescu called the result “the best possible outcome for all stakeholders.”
Transat closed down 2.5% to C$16.29 a share in Toronto trading.
Reporting by Allison Lampert; Editing by Marguerita Choy