Montreal – Canada’s flagship airline Air Canada announced Thursday its intention to buy tour operator Transat in a deal valued at Can$520 million (US$387 million).
A statement said Air Canada is holding exclusive 30-day talks with Transat, which announced last month it had been solicited by several parties.
During this period, “Air Canada will complete its due diligence review and the parties will finalize the negotiation of a definitive agreement regarding this transaction,” it said.
Transat offers vacation packages, hotel stays and air travel under the Transat and Air Transat brands to about 60 destinations in the Americas and Europe.
The company was co-founded by Francois Legault, who is the current premier of Quebec.
It made its inaugural flight in 1987 from Montreal to Acapulco and grew into Canada’s third largest airline, with 5,000 employees.
Legault, who left the company in 1997 over a disagreement with his business partners, said Thursday: “It breaks my heart to see Air Canada, our competitor, buy Air Transat. But what’s important is to make sure the head office stays in Quebec.”
Air Canada chief executive Calin Rovinescu said the merger would create “a leader in the highly competitive leisure travel market globally.”
The news comes after private equity firm Onex announced on Monday its purchase of Air Canada’s veteran rival Westjet for about Can$5 billion including assumed debt.