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MONTREAL — Transat is warning its shareholders of Groupe Mach’s “highly abusive” and “misleading” conditional offer for voting shares made on Aug. 2 in an effort to block Transat’s sale to Air Canada.
The Montreal real estate developer made an unsolicited mini tender offer to acquire 19.5% of Transat’s Class B voting shares for $14 per share, which represents an 8% premium over Air Canada’s $13 per share offer that was approved by Transat’s board in June.
Groupe Mach first came forward with its original bid for Transat in early June nearly three weeks after Air Canada and Transat entered into an exclusive agreement. Groupe Mach later withdrew its offer after stating the tour operator ignored the proposal.
Now, following its latest bid, Groupe Mach CEO Vincent Chiara says that he believes Air Canada undervalues Transat, that its sale process to Air Canada was flawed and that Air Canada’s offer creates uncertainty for Transat employees and its head office.
“I think Air Canada’s offer is unhealthy,” Chiara said in an interview with The Canadian Press. “I think that Transat’s board has mismanaged the process and that it is a bad transaction.”
Obtaining just under the 20% of shares would trigger Transat A.T.’s shareholder rights plan, the purpose of which is to provide protection from an unsolicited offer.
Shareholders are to vote on the Air Canada offer on Aug. 23. It requires approval from two-thirds to go through, and faces resistance from major Transat shareholders who feel the price is too low. It also needs to secure approval from regulators, including Transport Canada and the Competition Bureau.
“I have spoken with major shareholders (of Transat) and we have support (in our approach),” said Chiara, who did not name the supportive shareholders.
Mach has also pledged not to submit a proposal superior to that of Air Canada “as long as Transat’s current board is in place.”
Chiara declined to say if he wants to replace the tour operator’s administrators in the event that is able to block the Air Canada transaction.
The Mach leader said his latest proposal was fully funded.
Shortly after Groupe Mach submitted the proposal last week, Transat advised its shareholders to take no action on the offer and to not tender their shares until its board of directors has made a formal recommendation. It said the Special Committee will consider Groupe Mach’s latest offer with its advisors before making a formal recommendation to the board of directors.
Four days later, on Aug. 6, Transat said it is filing a complaint with the Tribunal administrative de marches finanicers regarding Groupe Mach’s “highly abusive, coercive, misleading and conditional offer” made last week.
In an official statement, Transat said Its board of directors and the special committee of the board “continue to unanimously reiterate that the arrangement with Air Canada is in the best interest of Transat and its stakeholders, and is fair to its shareholders.”
The statement went on to say Mach’s offer is “not a better deal for all the shares of Transat”, and that it is “designed to create uncertainty to entice shareholders to act quickly and contrary to their own interests.” The proposal is also limited to the holders of Class B Shares as of July 17 (the record date set by Transat), thus excluding all Class B Shares acquired after such date.
The board unanimously recommends that Transat shareholders vote for the arrangement resolution approving the plan of arrangement of with Air Canada, to reject the Mach offer and not deposit their shares with Mach.
“The Board, the Special Committee and their advisors categorically reject Mach’s Scheme as highly abusive, coercive, misleading and conditional, and prejudicial to the interests of shareholders and putting them at significant risk by unfairly disregarding their interests and subverting applicable securities rules designed to protect shareholders and treat them fairly and equally and to protect the integrity of capital markets,” said the statement.
The board also warns that Mach has “made no commitment to acquire and pay for any of the shares deposited under its proposal, and that its disenfranchises shareholders without any guarantee of compensation. It does this by encouraging them to deposit their shares and concurrently grant proxies in favour of Mach for all deposited shares, “irrespective of the number of shares, if any, that may ultimately be taken up and paid for”; and using these proxies to vote against the proposed arrangement with Air Canada at the Special Meeting, and without any disclosure regarding Mach’s plans and intentions for Transat and its shareholders.
“The Board is highly concerned by the fact that shareholders will only find out after the Special Meeting whether Mach will actually take up and pay for any of the very same Class B shares already voted on their behalf at the Special Meeting,” read the statement. “Transat is taking vigorous and immediate actions against Mach’s abusive scheme to protect its shareholders.”
In addition to filing the application with the Tribunal, Transat is reviewing other potential legal proceedings with the goal of protecting shareholders from Groupe Mach’s proposal. The tour operator has retained Kingsdale Advisors to act as its strategic shareholder advisor and proxy solicitation agent.
With file from The Canadian Press