(Reuters) – Air Canada AC.TO has slashed 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, as COVID-19 weighs on travel demand, the companies said in a statement on Saturday.
The country’s largest carrier had secured Transat shareholders’ approval for the deal last year with an C$18.00 a share bid, to bolster its then thriving leisure business.
But with the pandemic grounding flights globally, Air Canada faced shareholder pressure to renegotiate the deal which is still pending approval from European and Canadian regulators, Reuters reported in May.
Montreal-based 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.
Companies have been cancelling deals amid COVID-19 uncertainty, with aircraft parts suppliers Hexcel Corp HXL.N and Woodward Inc WWD.O abandoning their planned $6.4 billion all-stock merger in April.
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,” said Calin Rovinescu, the carrier’s chief executive officer, in a statement.
“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.
Reporting by Bhargav Acharya in Bengaluru and Allison Lampert in Montreal; Editing by Marguerita Choy