Air Canada ups the ante for Transat as Quebec securities regulator blocks Mach offer

An Airbus A330-200 aircraft of Air Transat airlines takes off in Colomiers near Toulouse, France, July 10, 2018. REUTERS/Regis Duvignau

Transat A.T. Inc. (TRZ) says Group Mach’s most recent share purchase offer – which the airline and travel company previously called “highly abusive” and “misleading” – has been blocked by Quebec’s securities regulator.

The decision comes less than a day after Air Canada (AC) boosted its offer to purchase all outstanding Transat shares from $13 to $18 per share, increasing the value of the transaction by $200 million to approximately $720 million.

Transat’s stock skyrocketed as much as 42 per cent on Monday. It was up around 40 per cent as of 11:34 p.m. ET.

Transat issued a statement Monday that said Quebec’s Tribunal administratif des marchés financiers accepted its application to effectively block the offer made by the Montreal real estate developer to purchase 6.9 million Transat shares for $14 per share. Mach is not allowed to acquire Transat shares and must return any shares that have already been deposited to them.

Transat had initially filed a complaint with the regulator last week over Mach’s offer, which would block Air Canada’s ability to purchase Transat, calling it “highly abusive, coercive, misleading” an “prejudicial to the interests of shareholders.”

Transat reiterated its support of Air Canada’s bid on Monday, urging shareholders to approve the transaction, which will go to a vote later this month.

Air Canada’s chief executive Calin Rovinescu said in a statement released Sunday that the airline agreed to boost its offer after extensive consultations with Transat’s shareholders, including its largest shareholder Letko Brosseau and Assocaites Inc. Letko Brosseau, which controls 19.3 per cent of Transat shares, had said it would vote against the Air Canada acquisition if the purchase price remained at $13 per share.

“We are therefore very pleased to have received Letko Brosseau's strong endorsement for our transaction. We know this achieves the best possible outcome for all stakeholders,” Rovinescu said in a statement.

AltaCorp Capital analyst Chris Murray wrote in a note to clients Monday that Air Canada’s higher bid means that shareholder approval of the deal is “highly likely.”

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