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.