Transat Reconfirms Acquisition By Air Canada, Explains Péladeau's Proposal

Travel and leisure firm Transat AT (TSX:TRZ) has reaffirmed its support for its planned acquisition by Air Canada (TSX:AC) in its exchange filing. The company clarified that reports may deceive investors into considering that there is an offer from telecom businessman Pierre Karl Péladeau's investment firm, Gestion MTRHP Inc, at C$ 6 per share, which is false. Its current offer is for C$ 5 per share.

The board further stated that it is an uninvited proposal from Péladeau’s investment company.

Transat AT also said the proposal is short of C$ 500 million in financing to support its working capital this year.

Transat’s Board member Jean-Yves Leblanc, president to the special committee, claimed that Péladeau's offer seems intended to influence the regulatory approval process by signifying that an alternative proposal exists.  This could lead to the regulatory authorities invalidating the deal between Transat and Air Canada.

Let us take a glance at the recent performances of Air Canada and Transat stocks.

Air Canada (TSX:AC)

Current Stock Price: C$ 26.10

The airline’s stocks jumped over three per cent on Tuesday, steered by the promising statement from Transat’s board. Air Canada stocks have rebounded by nearly 41 per cent in the last six months, although they have declined by over 55 per cent in the last one year.

The stock made it to TMX’s top volume companies with a 10-day average trading volume of approximately 4.1 million. Its present market cap is C$ 7.68 billion.

The industrial stock has a current price-to-cash flow ratio (P/CF) ratio of 22.80, and a price-to-book (P/B) ratio of 3.995. Its debt-to-equity (D/E) ratio is 7.67, as per TMX data.

Air Canada’s revenue plunged by C$ 4.773 billion against Q3 2019 due to the COVID-19 impact.

Image Source: Kalkine Group @2020

Transat A.T. Inc. (TSX: TRZ)
Current Stock Price: C$ 5.45

The Transat AT stock is currently trading over its last arrangement value of C$ 5 per share. The stock has gained 13 per cent in the last three months, driven by its acquisition reports, and has tumbled by over 66 per cent in the last one year.

Transat has a total of 37.75 million listed shares outstanding on the Toronto Stock Exchange (TSX). The company’s current market value is C$ 205.72 million, as per the TMX portal. However, the company’s scrip has a present debt-to-equity ratio of 3.09, which is better than Air Canada’s one.

In the fourth quarter of 2020, which ended on October 31 last year, the company reported a revenue of C$ 28.4 million against that of C$ 693.2 million in Q4 2019.



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