Transat A.T. Inc (TRZ.TO) is slamming Group Mach’s most recent share purchase offer as “highly abusive, coercive” and “misleading” and is urging shareholders to reject the proposed bid.
Transat said Tuesday it filed a complaint with Quebec’s securities regulator over the Montreal real estate developer’s offer to acquire 19.5 per cent of outstanding shares at a price of $14 per share – an eight per cent premium over Air Canada’s $13 per share offer, which was approved by Transat’s board of directors in June.
The airline and travel tour operator urged shareholders to reject what it called the “Mach scheme” – a move that would block Air Canada’s ability to purchase Transat – and vote in favour of Air Canada’s takeover offer.
“Transat is taking vigorous and immediate actions against Mach’s abusive scheme to protect its shareholders,” the company said in a statement.
“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.”
Transat also said it is reviewing “other potential legal proceedings” in order to protect shareholders “from the scheme.”
The statement comes less than two weeks before Transat shareholders are scheduled to vote on the Air Canada offer. The proposal must be supported by at least two-thirds of shareholders in order to be approved.
Some of Transat’s biggest shareholders have been critical of Air Canada’s offer for undervaluing the company. Letko, Brosseau and Associates and PenderFund Capital Management, which jointly own a 21.1 per cent stake in the company, have said they would vote against the agreement if the purchase price remained at $13 a share.
CIBC World Markets analyst Kevin Chiang said in a note to clients that Mach’s bid may push Air Canada to modestly raise its own offer to gain shareholder approval.
“We would not be surprised to see Air Canada modestly raise its bid in an effort to get this deal across the line given we believe it is the most logical buyer and we see a significant amount of synergies,” Chiang wrote.
Transat reiterated on Tuesday that the Air Canada offer is in the best interest of the company and fair to its shareholders. It also warned that Mach has not made a commitment to acquire and pay for the 19.5 per cent stake and that the proposal “disenfranchises shareholders without any guarantee of compensation.”
“Contrary to its claims that it is seeking to protect Transat's shareholders, Mach's scheme is highly prejudicial to their interests and coercive,” Transat said in a statement.
“It is designed to create uncertainty to entice shareholders to act quickly and contrary to their own interests.”
Air Canada’s chief executive Calin Rovinescu said on a conference call with analysts last week that a definitive agreement for Canada’s biggest airline to acquire Transat “will benefit all stakeholders.”
“This includes Transat shareholders, who will receive a significant premium from where their shares were trading before April, employees of both companies who will enjoy greater job security and Montreal, which will serve as home to an even stronger global airline,” Rovinescu said.