MONTREAL -- Air Canada will spend more to buy Transat A.T. Inc., the airline announced Sunday, saying it has upped the total offer by $200 million to win the support of the tour company's largest shareholder.
spending $18 per share, rather than $13. That brings the total offer to roughly $720 million, up from a previously announced bid worth $520 million.
"We know this achieves the best possible outcome for all stakeholders. For shareholders of Transat and Air Canada, the combination delivers excellent value, while also providing increased job security for both companies' employees through greater growth prospects," said Calin Rovinescu, president and CEO of Air Canada.
He added that Air Canada now has the backing of Letko Brosseau and Associates Inc., Transat's largest shareholder, which holds just over 19 per cent of outstanding shares.
The investor previously said it would not support the deal if the purchase price remained at $13 per share.
Rovinescu said his company was "very pleased to have received Letko Brosseau's strong endorsement for our transaction."
The initial bid was announced in June, and will go to the shareholders for a vote on Aug. 23. The deal also needs to secure approval from regulators, including Transport Canada and the Competition Bureau.
Air Canada said it plans to preserve the Transat and Air Transat brands and maintain the Transat head office.
Its higher bid comes as Transat has been facing off against rival bidder, the Montreal developer Group Mach, at a securities tribunal hearing over Mach's move to block the tour operator's sale to Air Canada.
Transat called on authorities to bar the real estate company from scooping up a plurality of Transat shares in a bid to derail the pending acquisition by Canada's biggest airline.
Group Mach had offered $14 per share -- an eight per cent premium over Air Canada's initial $13-per-share purchase agreement.
Transat spurned Group Mach's effort earlier this summer. The group has since been trying to secure at least 6.9 million, or 19.5 per cent, of the company's Class B shares at a cost of about $97 million.
Its chief executive Vincent Chiara has said he aims to then vote against Air Canada's offer, which needs at least two-thirds support from shareholders.
In the statement announcing the higher purchase price, Air Canada reiterated its position that Group Mach's effort is "highly abusive" and "coercive."
