Air Canada has slashed its price to buy Canadian tour operator Transat A.T. Inc, with the deal now being worth approximately C$188.7 million, down from C$720 million, as COVID-19 weighs on travel demand, the companies have said in a statement.
Canada'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 and Woodward Inc abandoning their planned $6.4 billion all-stock merger in April.
Under revised terms of the deal, Air Canada said that it will acquire all shares of Transat for C$5 per share, representing a premium of approximately 30.5% to Transat's last close on Friday October 9.
"Air Canada intends to complete its acquisition of Transat, at a reduced price and on modified terms," the carrier's chief executive officer, Calin Rovinescu, said 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," chair of the special committee of the board of Transat Jean-Yves Leblanc said in a statement.
Short-Term Loan Facility
As part of the deal, Transat has also secured a new C$250 million short-term loan facility, Transat said.