Twenty one months ago Air Canada announced they’d be acquiring Canadian low cost carrier Air Transat, in a deal that was finally going to be worth about three quarters of a billion dollars. That price got chopped down to less than $200 million during the pandemic.
The deal was delayed by Canada’s competition regulators, that pushed them into the pandemic and lowered the price.
Now the deal has been terminated as a result of European Commission objections. Air Canada will pay a CAD$12.5 million breakup fee.
“This transaction, first contemplated more than two years ago, was complicated by the pandemic, and, ultimately, Air Canada reached its limit in terms of concessions it was willing to provide the European Commission to satisfy their competition law concerns,” said Jean-Marc Eustache, President and Chief Executive Officer of Transat. “While both companies expected the proposed transaction to result in compelling benefits to shareholders, customers and other stakeholders, and even though we had received approval from the Canadian authorities, it has now become evident that we would not obtain the approval of the European Commission.
The primary competitive effects were going to be felt in Canada, where regulators signed off. If there’s a time where it makes sense to recognize the need for an industry to shrink it’s during a global pandemic.
I wasn’t enthusiastic about Brexit, and the U.K.’s Covid-19 response aside I don’t think the country will fare better outside the European Union. But Brussels bureaucrats, who delayed vaccinations while dickering with pharmaceuticals over price, haven’t accorded themselves well over the past year for sure.
off topic Gary , but have you seen the latest IHG stealth devaluation, Upper 100k Cap is gone with some properties pricing out at 120k per night. Posts describing it in the recent posts here;
https://www.flyertalk.com/forum/intercontinental-hotels-ihg-rewards-intercontinental-ambassador/2018620-deep-redemption-discounts-some-locations-dynamic-award-pricing-12.html
Yet I’m sure they will still let IAG’s acquisition of Air Europa go through smh.
I honestly don’t understand why the Canadian authorities approved it. Transat is Canada’s only low cost carrier and is very competitive with AC for vacations and other price sensitive travellers.
What John said, this isn’t a negative reflection on the EU, this is a negative reflection on the Canadian Competition Bureau. For those who know its history, that name is basically a joke. The Bureau has time and time again overseen mergers and acquisitions that created monopolies in many parts of Canada’s markets, and this was just the latest example. This deal should not have gotten off the ground, and as a Canadian I’m especially thankful the EU showed sanity where my own government could not. Now let’s see what happens with the Rogers/Shaw merger.
There’s something wrong in Denmark when European bureaucrats have authority to kill a merger between two Canadian companies. Why do we allow our sovereignty to be subject to organizations outside the reach of local voters.
Perhaps the merger shouldn’t have been approved by Canadian authorities but it was, and the Europeans need to butt out.
Precisely, Ken. Participating in any agreement, let along one that would allow a couple of non-players ax the deal, is a huge mistake and overreach. Sadly, now the US is gong to get sucked into the EU dedicating how we conduct our business. Coupled with our continuing participation in the worthless UN and other so called international bodies and their endless mandates of non-US policies we are well on our way to socialism and mediocrity.