Transat slams Group Mach bid as ‘abusive’, says it will challenge offer with Quebec securities regulator
transact AT Inc. is urging investors not to tender their shares to Group Mach’s latest bid, calling the attempt to block the Air Canada takeover “coercive” and “misleading.”
Transat, a Montreal-based airline and tour operator has agreed to a purchase by Air Canada worth $520-million, or $13 a share, despite complaints from some large shareholders the price is too low. Two-thirds of Transat shareholders must approve the deal in a vote on August 23.
Mach, a real estate developer in Montreal, has made several attempts to purchase Transat, the most recent one being a $14 offer last week for 19.5-per-cent of Transat shares. The move is seen as an attempt to align with unhappy Transat shareholders and block the Air Canada purchase.
Transat said in a statement on Tuesday morning it is filing a challenge to the Mach offer with the Tribunal administratif des marchés financiers, part of the Quebec securities regulator that adjudicates complaints about alleged securities rules violations.
“Transat is taking vigorous and immediate actions against Mach’s abusive scheme to protect its shareholders,” said Transat, reiterating the Air Canada offer is in shareholders’ best interests.
“The board, the special committee and their advisers categorically reject Mach’s scheme as highly abusive, coercive, misleading and conditional, and prejudicial to the interests of shareholders and putting them at significant risk by unfairly disregarding their interests and subverting applicable securities rules designed to protect shareholders and treat them fairly and equally and to protect the integrity of capital markets,” Transat said.
“Notably, the board warns that Mach has made no commitment to acquire and pay for any of the shares deposited under its scheme.
Transat said the Air Canada offer is a good deal for shareholders and will offer job security to its 5,000 employees.
Mach previous attempts to buy Transat include talks in recent months and an offer for the entire company that was withdrawn. Mach has sought financial help from the province for the deal, and says it will bring in a Spanish partner. The 19-5-per-cent offer of last week contained no such conditions.
Transat is Canada’s third-biggest airline, with a fleet of about 40 planes and a travel division. Air Canada is the country’s largest carrier.
Mach, Transat said, would be able to exercise the voting rights of the shares tendered to it before paying for them, a “bait-and-switch” tactic.
Alfred Buggé, Mach’s vice-president of mergers and acquisitions, dismissed the Transat accusations as “posturing.” He said by phone Mach has $100-million ready to pay for the 19.5-per-cent of Transat if the Air Canada takeover is voted down. At the same time, shareholders have the right to transfer their voting privileges to Mach while retaining ownership of the shares, he said.
Mr. Buggé said he has spoken to “many, many” institutional shareholders who are allied with Mach’s efforts to block Air Canada and operate the company in what he described as the “best interests of shareholders.” A proxy fight to overthrow the Transat board is not part of the plan, he said, although, “we don’t want to work with this board of directors.”
“Our first objective is we want this deal to be killed. Once that’s taken care of we’ve got $100-million on the table that we’ve risked. And our interests are perfectly aligned with the shareholders, unlike Air Canada and the board of directors,” he said.