(Reuters) - Air Canada's AC.TO revised C$720 million ($544 million) bid for Canadian tour operator Transat AT TRZ.TO is a fair offer and should secure investor backing for the transaction, Transat's fourth-largest shareholder said on Monday.
Air Canada, Canada’s largest airline, raised its offer for Transat by 38.5% to C$18.00 per share on Sunday, winning support from its largest shareholder Letko Brosseau, which holds about 19.3% of shares.
Amar Pandya, a senior investment analyst and portfolio manager for Vancouver-based PenderFund Capital Management, would not specify how the company would vote on Air Canada’s offer.
“At this price, we think it’s a fair offer,” Pandya said in a phone interview. “We think there will be support from shareholders.”
PenderFund Capital holds about 3% of shares in Transat, according to Pandya and Refinitiv data, exceeded by only three other shareholders. Air Canada needs the support of two-thirds of Transat shareholders during a meeting to be held on Aug. 23 in Montreal.
Air Canada sweetened the deal after several large shareholders, including PenderFund, balked at the initial C$13/share price. Air Canada has said it plans to use the company, which operates leisure carrier Air Transat, to grow its strong-performing leisure business and Montreal hub.
Earlier on Monday, Transat said a Canadian financial markets administrative tribunal had blocked Montreal real estate developer Groupe Mach’s offer to buy 19.5% class B voting shares of the tour operator.
Mach was aiming to block AC’s bid for Transat by acquiring the class B shares.
The new AC bid also topped an earlier competing offer from Group Mach for C$14 per share.
Transat shares were trading up 39% at C$16.41, while AC shares were down 1.2%.
Reporting by Shanti S Nair in Bengaluru and Allison Lampert in Montreal; Editing by Shailesh Kuber and Will Dunham
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