While Air Canada’s acquisition of Air Transat pushes ahead after the Canadian government’s recent approval of the deal, a Quebec businessman remains on the sidelines, reiterating his offer to take the Montreal-based leisure carrier. Pierre Karl Péladeau sent an open letter to the media on Saturday reminding decision-makers that he is the better choice to save the airline.
“By sinking Transat, a direct competitor for the great majority of transatlantic routes and sun destinations, Air Canada would have more than 60 per cent of the market, an unacceptable threshold in any industry,” -Pierre Karl Péladeau via The Montreal Gazette
One approval achieved, another still needed
On February 11th, it was announced that the federal government had approved Air Canada’s proposed purchase of the leisure airline, pending a number of conditions. The next day, during its Q4 2020 earnings call, Air Canada noted that the deadline for the sale was February 15th. However, this would be pushed back as approval by the European Union is still pending.
With the European Commission yet to rule on the acquisition, there’s a chance it may not go through. The probabilities are unknown and European authorities must consider a number of factors:
Reiterating the alternate offer
Since the merger has yet to be fully locked in, Québecor CEO Pierre Karl Péladeau is reminding anyone who will listen that his deal is still on the table. His open letter to the media states that he has the ability to follow-through on the offer, saying:
“For anyone in doubt, I have means to support my ambition and I wish to take over Transat so that Quebecers can continue to benefit from the choice that competition provides.” -Pierre Karl Péladeau via CTV News
However, on January 12th, Air Transat issued a clarification statement noting the following:
- Contrary to media reports, MTRHP’s proposal was actually for $5.00 per share.
- The proposal lacked binding, fully committed financing or evidence of sufficient cash on hand for the purpose of making the acquisition.
- The proposal lacked financing to support Transat’s 2021 working capital requirements of approximately $500 million.
Péladeau’s open letter appears to be a rebuttal against Air Transat’s claim that his proposal lacks sufficient financial backing. “I invite [Transat board members] to consider the reasonable terms of an agreement with my group so that we can save Transat,” he added in his letter.
Other Canadian carriers weigh in
It’s not just the Quebec businessman that wants to see Air Canada’s acquisition rejected. In a strongly-worded blog post, WestJet CEO Ed Simms openly voiced his opposition to the deal, saying that “the real losers in all of this are Canadians who believe in open and healthy competition.”
On the other hand, the head of Sunwing Airlines has openly backed Air Canada’s takeover of Air Transat, saying that the deal will be good for Canada’s aviation industry in competing against foreign airlines.
As this process drags on, it looks like the European Commission will have a lot to consider.
Do you think Pierre Karl Péladeau still has a chance to change the situation? Or will Air Canada’s acquisition get the green light from the EU and go ahead? Let us know your thoughts in the comments.
