Air Canada-Transat merger canceled
A deal that would see Canada’s largest airline acquire rival carrier Transat AT is officially dead.
Air Canada and Transat both released statements Friday announcing the mutual termination of the $ 190 million deal.
The companies cited regulatory hurdles as the reason, noting that European authorities have indicated their refusal to follow the lead of Canadian officials and approve the transaction.
“While both companies expected that the proposed transaction would result in unquestionable benefits for shareholders, customers and other stakeholders, and even though we had received approval from Canadian authorities, it has now become obvious that we would not get the approval of the European Commission. ”, Jean-Marc Eustache, president of Transat, declared in a press release.
The deal that would have allowed Air Canada to acquire Transat was first announced in 2019, before the COVID-19 pandemic devastated market conditions in the transportation and tourism industries.
The merger value has changed several times and was last revised in October 2020.
But Air Canada says resistance from the European Commission, responsible for signing the acquisition, is what ultimately spelled the end of the deal.
“Following recent discussions with the EC, it has become clear, however, that the EC will not approve the acquisition on the basis of the currently proposed remedial package,” the company said in a statement.
“After careful consideration, Air Canada concluded that offering additional and expensive solutions, which may not yet obtain EC approval, would significantly compromise Air Canada’s ability to compete at scale. international, which would negatively impact customers, other stakeholders, and future prospects as she recovers and rebuilds herself from the impact of the COVID-19 pandemic. “
Vestager from EU raises competitive concerns
Air Canada says it will pay a $ 12.5 million termination fee to Transat, while the other airline no longer has financial obligations related to the deal.
Air Canada has offered insufficient concessions to address competition concerns over its planned acquisition, EU competition chief Margrethe Vestager said on Friday.
Vestager said she was very concerned about the impact of the deal which Air Canada had failed to resolve.
“While the coronavirus epidemic has strongly impacted the airline industry, preserving competitive market structures is essential to ensure that the recovery can be swift and strong,” she said in a statement.
“The proposed transaction would raise competition concerns on a large number of transatlantic routes. Based on the results of the market test, the proposed remedies appeared insufficient.”
Transat said in a statement that it would consider other opportunities, mentioning Pierre Péladeau by name.
Péladeau, the businessman and former Quebec politician had already expressed his interest in an offer to acquire Transat.