Over the weekend, Air Canada announced they still plan to acquire Air Transat but on revised terms. The proposed deal would see Air Canada purchase Air Transat at $5 per share, down from the original $18 per share.
Is it a done deal? While both parties have agreed to the revised terms, the deal is far from final.
- Regulators in Canada, Quebec and the European Union will have to evaluate the deal against anti-trust concerns and give it the green light before it can proceed. Deadline for the deal to receive regulatory approval was moved back from December to February 15th.
- Shareholders of Air Transat welcome the deal but are waiting to see if any other bidders emerge before giving it the rubber stamp of approval.
What does this mean for you? Prior to the pandemic, the proposed takeover of Air Transat by Air Canada was highly contentious. If approved, the acquisition would give Air Canada a 60% marketshare over Transatlantic flights and dominance in Montreal air travel.
- Conventional wisdom is that less competition leads to higher prices and a worse experience for consumers. Air Canada and Air Transat have done little to reassure passengers that this won't happen.
Zoom out: The more than 60% discount in share price shows you how hammered the airline industry is being hit. Air Canada is proceeding with the deal because they think they're getting a airline for a steal. Now it's up to the regulators to decide if it's in our country's best interest...