CALGARY — Analysts have recommended to shareholders to give the green light on Onex’s acquisition of WestJet, making the deal one step closer towards finalization.

Independent proxy advisory firms Institutional Shareholder Services Inc. (ISS) and Glass, Lewis & Co. have both recommended shareholder to vote for the acquisition at a special meeting of between shareholders and optionholders on July 23 in Calgary.

At the meeting, securityholders will be asked to vote on a special resolution approving an arrangement under the Business Corporations Act involving WestJet, the purchaser Kestrel Bidco Inc., (an affiliate of Onex) and the Securityholders.

“The rationale behind the proposed transaction appears reasonable as current shareholders will get to exit their investment at a significant premium and at multi-year highs for WestJet’s share price,” said ISS. “The cash consideration provides certainty of value, and it appears unlikely that a better offer will be made for the company.”

Glass Lewis also added: “We believe that the merger consideration represents a compelling exit valuation and an attractive market premium for the [WestJet’s] shareholders. In the absence of a superior competing offer, we believe that the arrangement agreement warrants shareholder support at this time.”

The arrangement agreement between WestJet and Onex on May 12 includes the acquisition of all issued and outstanding shares of WestJet at a price of $31.00 per share in cash.

Here are some key reasons for the arrangement:

• Arrangement More Favourable than Status Quo. The view of the Special Committee and the Board that the value offered to shareholders under the Arrangement is more favourable to shareholders than the potential value that could result from remaining a publicly traded company and continuing to pursue WestJet’s strategic business plan.
• Better Acquisition Terms Highly Unlikely. Having regard to the regulatory constraints facing any potential acquiror, the magnitude of the acquisition of WestJet and the nature of its business, it is highly unlikely that any other party or parties would be capable of paying, and be prepared to pay, a higher price to acquire WestJet.
• Significant Premium to Market Price. The consideration to be paid to the shareholders of $31.00 cash per share represents a premium of 67% over the closing price of the shares on May 10, 2019 (the last trading day prior to the public announcement of the arrangement), and a premium of 63% over the 20 day volume-weighted average trading price for the shares ended on such date.
• Certainty of Value and Liquidity. The consideration to be paid to shareholders of $31.00 cash per share is all cash, which provides shareholders with certainty of value and immediate liquidity.
• Continued Payment of Regular Quarterly Dividends. Under the terms of the arrangement, WestJet is permitted to pay its regular quarterly cash dividend, not in excess of $0.14 per share.