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Air Canada To Purchase Air Transat

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From their previous press release:

"

MONTREAL, June 25, 2019 /CNW Telbec/ – Group Mach Inc. (“Mach”) is pleased to announce its non-binding agreement with the Government of Quebec in connection with Mach’s formal proposal to acquire all issued and outstanding voting shares (the “Shares”) of Transat A.T. Inc. (TSX: TRZ) (“Transat” or the “Company”) at a price of $14.00 cash per Share to the attention of the Board of Directors of Transat as announced in Mach’s press release of June 14, 2019 (the “Proposal”). As such, Mach has deposited today an amended version of its Proposal with the Board of Directors of Transat by, in particular, removing conditions related to financing from the Government of Quebec ..."
 

In it they announced a non-binding agreement with the Gov't of Quebec while removing the financing condition from the Gov't of Quebec. Did that mean that they had a financing agreement in place so the condition was removed? If so, perhaps TS didn't wish to be beholden to the Gov't?

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Minister of Transport receives submission from Air Canada and Transat A.T. Inc. regarding proposed purchase of Transat A.T. Inc. by Air Canada Français

 


News provided by

Transport Canada

Jul 23, 2019, 16:52 ET

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OTTAWA, July 23, 2019 /CNW/ - On July 17, Air Canada and Transat A.T. Inc. notified the Honourable Marc Garneau, Minister of Transport, of a proposed transaction whereby Air Canada would acquire Transat A.T. Inc. in accordance with the mergers and acquisitions provisions of the Canada Transportation Act.

The Minister of Transport has 42 days from the date of notification to determine whether the proposed transaction raises public interest issues related to national transportation. If the Minister determines that the transaction raises public interest issues related to national transportation, then a public interest assessment of the proposed transaction would be conducted with input from the Commissioner of Competition, who would assess impacts on competition.

The public interest assessment would include targeted consultations, as well as an analysis of the economic benefits or challenges resulting from the proposed transaction.

The Government of Canada will conduct the appropriate reviews in a rigorous and timely fashion.

Transport Canada is online at www.tc.gc.ca. Subscribe to e-news or stay connected through Twitter, Facebook, YouTube and Instagram to keep up to date on the latest from Transport Canada.

This news release may be made available in alternative formats for persons living with visual disabilities.

SOURCE Transport Canada

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https://business.financialpost.com/pmn/business-pmn/mach-looks-to-buy-transat-class-b-shares-to-block-air-canada-deal

 

Quote

Mach seeks Transat class B shares to block Air Canada deal

Montreal real estate developer Group Mach on Friday offered to buy at least 6.9 million, or about 19.5%, class B voting shares of Transat AT Inc at C$14 per share, as it looks to block Air Canada’s deal for the Canadian tour operator.

Transat in June accepted Air Canada’s all-cash bid of C$520 million ($394 million), or C$13 a share, over a C$14 per share offer from Mach.

Mach said it plans to use the purchased shares to vote against the Air Canada-Transat deal, saying the offer “greatly undervalues” Transat.

The latest offer represents a 21.2% premium to Transat’s Thursday close of C$11.55.

Mach also said it has no intention to launch a formal hostile takeover bid and added that it will not raise the C$14 offer as long as the current Transat board is in place.

Mach said last month that its buyout proposal had become null and void after Transat accepted Air Canada’s bid and that it had not withdrawn the offer.

The offer had raised questions after Mach initially said it needed government financing to complete the deal, a condition it waived in June.

Transat is required to pay C$15 million if it backs out of the agreement in favor of a fully financed offer of C$14 a share or more that is not matched by Air Canada.

Air Canada would need approval from two-thirds of Transat shareholders for the deal to go through.

Transat said a special committee of its board was reviewing Mach’s latest offer and advised shareholders to not tender shares until a formal recommendation.

Scotiabank analysts said Transat shareholders, employees, and the Canadian government would find “the most value creation for all” in an Air Canada-Transat deal, unless rival airlines showed an interest.

“Our initial view is that Mach’s second attempt to derail the AC/TRZ merger lacks merit, because we don’t see a clear strategic rationale in its disclosed proposal against what we expect to be a meaningfully synergistic AC/TRZ merger,” the analysts said. ($1 = 1.3202 Canadian dollars)

(Reporting by Arathy S Nair in Bengaluru and Allison Lampert in Montreal; Editing by Shinjini Ganguli and Sriraj Kalluvila)

 

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Transat Advises its Shareholders to Take No Action on Group MACH’s Offer

Provided by Transat A.T. Inc./CNW

MONTREAL, Aug. 2, 2019 /CNW Telbec/ – Transat A.T. Inc. (“Transat”) one of the largest integrated tourism companies in the world and Canada’s holiday travel leader, today confirms it has taken note of Group MACH Inc.’s press release regarding its unsolicited mini tender offer to acquire 19.5% of Transat’s Class B voting shares (the “Offer”).

Take No Action on the Offer
The special committee of the Transat’s board of directors (the “Special Committee”) is reviewing the terms of the Offer with its advisors for the purposes of making a recommendation to shareholders as to its terms.

Transat shareholders are advised to TAKE NO ACTION on the Offer and NOT TO TENDER THEIR SHARES until Transat’s board of directors has made a formal recommendation to shareholders. Having taken note of the press release announcing the Offer, the Special Committee will consider it with its advisors before making a formal recommendation to Transat’s board of directors. Shareholders will be notified of any recommendation of the board of directors through a news release.

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Funny the TS BOD will make a recommendation for shareholders to sell to AC at $13, but not MACH at $14.

I know who I'd be calling.

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4 hours ago, j.k. said:

Funny the TS BOD will make a recommendation for shareholders to sell to AC at $13, but not MACH at $14.

I know who I'd be calling.

It would be because the offer was only for a limited number of shares  and that would as the story says, might block the sale to AirCanada.

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https://www.theglobeandmail.com/business/article-transat-slams-group-mach-bid-as-abusive-says-it-will-challenge/

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.

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Here is Transat's official statement:  https://canadianaviationnews.wordpress.com/2019/08/06/transat-warns-its-shareholders-against-machs-highly-abusive-coercive-misleading-and-conditional-scheme-and-urges-them-to-reject-it/

Transat warns its shareholders against Mach’s highly abusive, coercive, misleading and conditional scheme and urges them to reject it

 
‎Today, ‎August ‎6, ‎2019, ‏‎2 hours ago | Canadian Aviation News

Provided by Transat A.T. Inc/CNW

Transat to launch complaint to securities regulator to block Groupe Mach’s abusive scheme

MONTREAL, Aug. 6, 2019 /CNW Telbec/ – Transat A.T. Inc. (“Transat”), one of the largest integrated tourism companies in the world and Canada’s holiday travel leader, announced that it is filing today a complaint with the Tribunal administratif des marchés financiers, regarding Groupe Mach Acquisition Inc.’s highly abusive, coercive, misleading and conditional offer to acquire 6.9 million Class B voting shares of Transat (the “Class B Shares”) made on August 2, 2019 (the “Scheme”), representing approximately 19.5% of Transat’s Class B Shares.

Transat’s board of directors (the “Board”) and the special committee of the Board (the “Special Committee”), supported by their financial and legal advisors continue to unanimously reiterate that the arrangement with Air Canada is in the best interest of Transat and its stakeholders and is fair to its shareholders, and unanimously recommend that Transat shareholders:

  1. Vote FOR the arrangement resolution approving the plan of arrangement with Air Canada; and
  2. REJECTthe Mach Scheme and NOT DEPOSIT their shares with Mach.

The Board, the Special Committee and their advisors 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.

Notably, the Board warns that Mach has made no commitment to acquire and pay for any of the shares deposited under its Scheme. The Scheme disenfranchises shareholders without any guarantee of compensation by (1) encouraging them to deposit their shares and concurrently grant proxies in favour of Mach for all deposited shares, irrespective of the number of shares, if any, that may ultimately be taken-up and paid for, and (2) using these proxies to vote against the proposed Arrangement with Air Canada (the “Air Canada Arrangement”) at the Special Meeting, and without any disclosure regarding Mach’s plans and intentions for Transat and its shareholders.

The Board is highly concerned by the fact that shareholders will only find out after the Special Meeting whether Mach will actually take up and pay for any of the very same Class B Shares already voted on their behalf at the Special Meeting.

Transat is taking vigorous and immediate actions against Mach’s abusive scheme to protect its shareholders

Transat is filing an application with the Tribunal administratif des marchés financiers to challenge Mach’s Scheme. In addition, Transat is reviewing other potential legal proceedings with the goal of protecting shareholders from the Scheme and defending their interests, and the integrity of capital markets.

Transat is sending to its shareholders a letter containing the detailed reasons supporting the Board’s recommendation that shareholders 1) vote FOR the arrangement resolution approving the plan of arrangement with Air Canada; and 2) REJECT the Mach Scheme and NOT DEPOSIT their shares with Mach. A copy of such letter is available under Transat’s SEDAR profile at www.sedar.com and on Transat’s website at transat.com.

Transat has retained Kingsdale Advisors to act as its strategic shareholder advisor and proxy solicitation agent and to answer information requests from shareholders. Communications with Kingsdale Advisors may be made by phone toll free within North America at 1-888-518-1552, or collect call outside North America at 416-867-2272, or by e-mail at contactus@kingsdaleadvisors.com.

Beware of Mach’s misleading promise of a better deal and coercive and unfair shareholder treatment

Mach’s Scheme is not a better deal for all the shares of Transat, but a partial bid on a limited number of shares representing 19.5% of the outstanding Class B Shares, and therefore does not provide liquidity to all shareholders of Transat.

Contrary to its claims that it is seeking to protect Transat’s shareholders, Mach’s Scheme is highly prejudicial to their interests and coercive. It is designed to create uncertainty to entice shareholders to act quickly and contrary to their own interests. The Scheme is limited to the holders of Class B Shares as of July 17, 2019, the record date set by Transat to determine the shareholders entitled to vote on the Air Canada Arrangement, thus excluding all Class B Shares acquired after such date. The bid also excludes all Class A variable voting shares, thereby frustrating the principle that such shares be treated on equal footing with the Class B Shares.

In contrast, the Air Canada Arrangement is fair to all shareholders and provides liquidity for all of the shares held by all of Transat’s shareholders, not only a small fraction of them.

By setting the mark just below the regulatory threshold of 20% of the outstanding Class B Shares, Mach is deliberately evading the take-over bid rules of Canadian securities laws designed to protect shareholders and afford them with a fair and equal treatment and sufficient time and information to make informed decisions.

Beware of Mach’s abusive attempt to obtain voting rights for free

The Scheme and Mach’s concurrent proxy solicitation efforts are value-destructive for all shareholders. Mach has designed a Scheme that allows it to exercise all of the voting rights of shareholders who deposit their Class B Shares, before committing to purchase all or even any of them.

Mach’s Scheme purports to offer a premium which will however be paid, if at all, on a limited number of shares and only on up to a maximum of 19.9% of all outstanding Class B Shares. Shareholders face a significant risk of receiving the price offered by Mach for only a fraction and not all of their shares, with no premium on the remainder. As a result, shareholders will be left holding substantially all, if not all, the shares they originally held with no guarantee of any future liquidity and exposed to significant market and other risks and fluctuations under the newly acquired influence and control of Mach.

The Scheme is a “bait and switch” tactic: Mach wants to vote all of the Class B Shares deposited by Transat shareholders while paying for none or only some of them. Mach intends to vote 100% of the proxies but, in reality, may only pay for up to 19.9% of the total number of Class B Shares, if any at all, thereby returning the remaining voting shares to shareholders. The remaining voting shares (being at least 80.1%) then held by shareholders would return to the market price that would prevail after the proposed Arrangement with Air Canada has been rejected. Mach could therefore potentially unilaterally derail the transaction with Air Canada without paying a penny.

Beware of Mach’s highly conditional Scheme

Mach’s Scheme is highly conditional and can be withdrawn, modified or extended for any reason and at any time given the extremely broad and discretionary conditions attached to Mach’s Scheme and crafted in its favour. Mach’s only intention is to vote against the Air Canada Arrangement, thereby preventing Transat’s shareholders from receiving the premium represented by Air Canada’s offer for 100% of the shares, and undermining a transaction that is in the best interest of Transat and all of its stakeholders.

The Board and the Special Committee urge shareholders to reject Mach’s Scheme, an entity with no expertise in the highly complex airline industry, no proof of financial ability to fund the Scheme, and which has made multiple and changing proposals over time while failing to set out any plan or vision for Transat.

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22 hours ago, Turbofan said:

Mach wants to vote with shares they have not purchased.  Nor will they purchase if the sale to AC is not blocked.

 

Because only shareholders of record on the date the deal was announced can vote. So Mach only wants your proxy with an option to buy at $14.

If an investor doesn't take the $14 offer, and this gets a No vote anyway they'll be kicking themself.

Even without MACH at 19.5%, this might get voted down.

The largest shareholders are all against it. They'll be voting. How many small mom and pop investors and etf holders do you think will be voting? Minimal. And I bet with all the noise on this many that do are thinking they can do better than $13.

Then what do you get? Who knows.

At least if you throw in with Mach you're protected either way, yes or no. $13 maybe $14.

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Then what do you get? Who knows.

A $14 offer from AC?  But maybe not.  It’s a gamble.  If AC thinks the vote is going south they may up the offer at the last minute.

If the vote does go south how much does that impact the AC share price?

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1 hour ago, Turbofan said:

Then what do you get? Who knows.

A $14 offer from AC?  But maybe not.  It’s a gamble.  If AC thinks the vote is going south they may up the offer at the last minute.

If the vote does go south how much does that impact the AC share price?

The real question is, if the other bid sinks the AC bid, then what happens to Transat and in particular when the competing bid lack financing?

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9 hours ago, Turbofan said:

Then what do you get? Who knows.

A $14 offer from AC?  But maybe not.  It’s a gamble.  If AC thinks the vote is going south they may up the offer at the last minute.

If the vote does go south how much does that impact the AC share price?

If this bid is sunk IMO the CEO/board gets fired and a new direction takes shape. Maybe activist type investors.

You're right, they may up the offer but I doubt it, particularly if we don't see it by the end of the week... and I'm not sure it makes a difference with Mach acquiring shareholder proxies and +/-25% of the vote already publicly against the deal... not to mention everyone else that's either not voting or possibly voting No.

Transat management has completely mishandled this.

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7 hours ago, Marshall said:

The real question is, if the other bid sinks the AC bid, then what happens to Transat and in particular when the competing bid lack financing?

New direction. Growth focused in the property division which Mach alleges had been particularly poorly managed. We always think the airline is the business, we're mostly airline people, but in Transat's case it's not, the package and property, are the business and assets. 

And the Mach bid was fully financed - they put a second revised offer without finance conditions last month which went ignored.

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4 hours ago, rudder said:

Well, that settles that......

Pretty good investment for Mach, if they duped enough people into selling their shares for $14.

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To be honest, the TRZ BOD look pretty foolish for recommending acceptance of an offer at $13.

$18 looks closer to a realistic takeover bid factoring in subscription incentive and asset value.

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p.s. if anybody was curious how serious CR was about acquiring TRZ and how much that acquisition has been integrated in to the AC strategic plan - you now have the answer.

  • Like 1

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5 hours ago, moeman said:

Pretty good investment for Mach, if they duped enough people into selling their shares for $14.

The Quebec securities body has just blocked the Mach bid and ordered the company to return any shares it has received, so now it's indeed over.

\\https://www.newswire.ca/news-releases/the-tribunal-administratif-des-marches-financiers-quebec-blocks-groupe-mach-s-scheme-891235492.html

Edited by dagger

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1 hour ago, rudder said:

p.s. if anybody was curious how serious CR was about acquiring TRZ and how much that acquisition has been integrated in to the AC strategic plan - you now have the answer.

I'll still be interested to see what AC does with the hotel assets. I am far from certain CR wants to play in that area, unless he looks at some kind of REIT where AC gets shares in a venture with an experienced property owner leasing to known hotel brands. If AC sells the land holdings off, and for how much... that will go a long way to telling me whether Mach had any chance to make money off its proposal, and how much Transat the airline is worth shorn of those non-airline assets.

Edited by dagger

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14 minutes ago, dagger said:

I'll still be interested to see what AC does with the hotel assets. I am far from certain CR wants to play in that area, unless he looks at some kind of REIT where AC gets shares in a venture with an experienced property owner leasing to known hotel brands. If AC sells the land holdings off, and for how much... that will go a long way to telling me whether Mach had any chance to make money off its proposal, and how much Transat the airline is worth shorn of those non-airline assets.

I have no doubt the non-core asset sale will begin immediately after closing.

AC is not in the hotel business.

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