Air Canada-Transat deal shelved over competition concerns

Terms were agreed in June 2019, which would have seen Air Canada pay C$18 per Transat share.

However, this valuation was revised down to just C$5 per share last October owing to the effects of the Covid crisis.

The deal was approved by the Canadian government in February, subject to approval by competition authorities in Canada and the European Commission.

At the weekend, though, it was announced the deal was off.

"The parties have reached this agreement after having been advised by the European Commission that it would not approve the transaction," said Transat.

"This transaction, first contemplated more than two years ago, was complicated by the pandemic, and, ultimately, Air Canada reached its limit in terms of concessions it was willing to provide the European Commission to satisfy their competition law concerns," said Jean-Marc Eustache, president and chief executive of Transat.

Air Canada will pay Transat a one-off C$12.5 million termination fee.