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Saturday, January 22, 2022

Air Canada Drops Transat Acquisition After Hitting EC Roadblock

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Air Canada has terminated its planned acquisition of Montreal-based Transat, citing “onerous remedies” that would be required to secure approval by the European Commission.

The carrier said it had proposed a “significant package of remedies that went beyond the commercially reasonable efforts required” in previously mergers approved by the EC for the C$190 million acquisition, which was approved by the Canadian government in February. However, Air Canada said the commission indicated it would not approve the acquisition under that proposal, and additional concessions to quell the EC’s competition concerns would “significantly compromise Air Canada’s ability to compete internationally.”

Cowen analyst Helane Becker in a research note said Transat “is likely to look for another merger partner.” Air Canada agreed to pay a C$12.5 million termination fee to Transat to end the agreement, but Transat is not required to pay Air Canada a fee should it enter into another acquisition agreement.

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