(Reuters) – Air Canada <AC.TO> has lowered its price to buy Canadian tour operator Transat A.T. Inc <TRZ.TO> with the deal now worth about C$188.7 million ($143.86 million), down from C$720 million previously, reflecting the post-COVID-19 reduction in airline values, the companies said in a statement on Saturday.
Air Canada had secured Transat shareholders’ approval for the deal last year with a sweetened C$18.00 a share bid, to bolster its leisure business.
Under revised terms of the deal, Air Canada said it will acquire all shares of Transat for C$5 per share, representing a premium of about 30.5% to Transat’s last close on Friday.
“Air Canada intends to complete its acquisition of Transat, at a reduced price and on modified terms,” Calin Rovinescu, chief executive officer of Air Canada said in a statement.
The deal remains subject to shareholder approval, court approval and other regulatory approvals in Canada and the European Union, Air Canada said.
Reuters reported in May that the deal was fuelling jitters among some investors who wanted to see it renegotiated with the aviation industry in turmoil due to the pandemic.
“Consummating the initial deal at $18.00 was not an option that was viable given the full set of circumstances the Corporation is facing,” Jean-Yves Leblanc, chair of the Special Committee of the Board of Transat said in a statement.
As part of the deal, Transat has also secured a new C$250 million short-term loan facility, Transat said.
Air Canada, like many of its global peers, has slashed flights, suspended financial forecasts and sought government aid as the industry deals with its worst slump.
($1 = 1.3117 Canadian dollars)
(Reporting by Bhargav Acharya in Bengaluru; Editing by Marguerita Choy)