Air Canada challenges Onex’s proposed WestJet takeover bid

victoria@aviationnews-online.com
By victoria@aviationnews-online.com September 10, 2019 10:45

Air Canada challenges Onex’s proposed WestJet takeover bid

Air Canada has sent a letter to the Canadian Transportation Agency (CTA) challenging the proposed takeover of rival WestJet by Onex Corp.

The challenge has come on the grounds of foreign ownership rules, The Canadian Press has reported. 

Toronto-based Onex, agreed in May to buy WestJet in a cash deal and take the company private. The acquisition was valued at $5 billion including debt.

The report says that Air Canada has pointed out that due to the “opaque structure” and “flexibility” of Onex’s capital structure, there is a risk that the majority of co-investors in Kestrel Bidco, the subsidiary buying WestJet, will come from outside Canada. 

Under Canadian law, it is said that foreign ownership of airlines is capped at a maximum of 49%, with not one investor being able to hold more than a 25% stake.

In August, The Canadian Competition Bureau granted unconditional approval for WestJet Airlines’ proposed transaction with Onex Corporation by issuing a no-action letter. 

The CTA told Reuters that “the process underway will allow the CTA to determine whether the proposed transaction will result in an undertaking that is Canadian”.

victoria@aviationnews-online.com
By victoria@aviationnews-online.com September 10, 2019 10:45