Transat's shareholders voted overwhelmingly in favour of Air Canada’s CAD720 million Canadian dollar (USD540 million) or CAD18-per-share (USD13.60) bid for the tour operator, which includes the subsidiary Air Transat, on August 23. But the planned acquisition raises issues of public interest and needs further scrutiny, in particular on how it will affect competition, Canadian Transport Minister Marc Garneau said.
The deal would give Transat a 60% market share on routes between Canada and Europe and require regulatory approvals from both sides of the Atlantic, the news agency Reuters reported.
"A public interest assessment of the proposed transaction will be conducted with input from the Commissioner of Competition," Garneau said in a statement issued after the market closed on August 26.
Consultations involving the aviation industry and the public will start on November 4 together with “analysis of the economic benefits or challenges resulting from the proposed transaction,” the minister said. Canada's government now has 250 days, until May 2, 2020, to complete the public interest assessment, with the possibility of an extension of an additional 100 days "should extra time be necessary".
A "significant majority" of 94.77% of the shareholders, representing 70.28% of votes entitled to be cast, were favour of the resolution approving the acquisition on August 23.
The competition review is likely to be “the most strenuous given the overlap of the companies in the Montreal and Quebec markets,” AltaCorp Capital analyst Chris Murray said in a note quoted by Bloomberg, adding that an upcoming federal election “could also expose the transaction to heightened levels of political discourse”. However, the analyst said he believed the deal would ultimately be approved and close by 2020.
Quebecor CEO Pierre Karl Péladeau, who is also a shareholder in Transat, reiterated his opposition to the deal to the Canadian television programme Le Téléjournal, asking: "Is it in the public interest to see a company control more than 60% of the transatlantic routes? Is it in the public interest to see a company control over 40% of sun destinations? It will be up to [Garneau] to ask the question."
