Transat A.T. Inc. (TSX:TRZ) (OTC:TRZBF) has today received court approval on its sale to Air Canada (TSX:AC) (OTCQX:ACDVF), causing TRZ stock to dip slightly.
The international tour operator, based in Montreal, has been the subject of a scrap between Canada’s largest airliner and real estate company Groupe Mach. Earlier this month, Air Canada sweetened its offer for the firm by $200 million CAD to $720 million CAD. Groupe Mach had been trying to purchase a minority stake in Transat in order to block Air Canada’s acquisition, but this move was blocked by Quebec’s Tribunal administratif des marchés financiers. TRZ shares are currently valued at $15.11.
With Groupe Mach pushed out of the equation, Air Canada was free to begin proceedings to acquire Transat and today’s ruling from the Superior Court of Quebec is another significant hurdle cleared on the way to finalizing the deal. The takeover will go some way to narrowing the field of airline competitors in Canada, as it will bring Air Canada’s market share for transatlantic flights to about 60%. However, the deal will be subject to further scrutiny from regulators in Europe, which could be the reason for the drop off in TRZ shares today.
TRZ stock hit a five year high earlier this month of $17.00, which is a huge increase of 264% from a March low of $4.66. This surge, and a key factor in the company’s attractiveness to larger firms, is due in part to Transat’s esteemed reputation among travelers and industry bodies having been named World’s Best Leisure Airline for the second year running at the Skytrax 2019 World Airline Awards.
Groupe Mach had initially proposed privatization of TRZ stock at $17 per share; however, this was countered by Air Canada, which raised its proposal to $17 per share. Transat needed the approval of two-thirds of its shareholders at a meeting on Monday, and this passed easily with 95% of shareholders in favor. The deal is expected to be finalized during the second quarter of 2020.
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