Mergers and acquisitions: Transat, Air Canada deal tightened

The Transat/Air Canada deal continues to heat up. When it comes to mergers and acquisitions in Canada, none has been getting more press than the possible union between the two major airlines. And Air Canada has just upped the ante by $200 million to an increased offer of $720 million. The board of directors at Transat has told its shareholders they should take the deal. 

Groupe Mach Inc. had been trying to acquire a minority stake in Transat to thwart the Air Canada deal, but shareholders' heads were turned when Air Canada increased its bid. Shareholders are expected to vote positively in favour of the airline's proposal in the coming weeks. If all goes as planned, the deal will close in the early part of next year.

Air Canada's CEO has said the merger will deliver excellent value for shareholders while providing increased job security for the employees of both companies. The merger is pretty much cinched as of now since Transat would have to pay Air Canada $40 million if it terminated the transactions now under certain circumstances. That translates into more than $19 a share in cash.

There are many rules that go along with mergers and acquisitions in Canada. Whether these deals involve millions of dollars or are more frugal on the financial scale, having a lawyer weigh in during the process may ensure all legalities are meeting the letter of the law. Mergers and acquisitions are some of the most complex business transactions. It is likely that the business people involved in them will need legal counsel to ensure a smooth transition. 

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