Quebec developer Group Mach withdraws $14-per-share bid for Transat

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Group Mach said Wednesday it is withdrawing its bid for Transat A.T., stating the tour operator chose to ignore its proposal even though it featured a higher price than Air Canada's offer.

Alfred Bugge, head of mergers and acquisitions at Group Mach, said Transat was well aware of the Quebec developer's $14-per-share offer last week but forged ahead with an Air Canada takeover agreement priced at $13 per share.

"We have no intention of submitting a superior proposal as defined in the definitive agreement between the two companies," Bugge told The Canadian Press.

"Transat did not even take the time to communicate with us. We had no acknowledgment, no phone call, zero," he said. "Why would we submit a higher proposal again? It would be ridiculous."

Under the agreement, Transat shareholders will convene by Aug. 26 to vote on the Air Canada deal, valued at $520 million. Until then Transat can accept competing offers of at least $14 per share on top of a $15-million break fee for Air Canada, which could opt to match the superior bid.

The current deal faces legal and regulatory scrutiny along with resistance from Transat shareholders Letko, Brosseau and Associates and PenderFund Capital Management, which jointly own a 22.06 per cent stake.

The withdrawal may concern some major shareholders who say Air Canada's successful bid is too low and want more offers on the table.

"We believe Air Canada's offer doesn't reflect the value of Air Transat," PenderFund portfolio manager Amar Pandya said in an email last week.

Montreal-based FNC Capital and Quebecor Inc. chief executive Pierre Karl Peladeau have previously expressed interest in Transat. "We would encourage those interested parties to make a formal offer to the board of directors," Pandya said.

Transat declined to comment on whether the tour operator has received other proposals since last week.

Transat and Air Canada announced the transaction last Thursday, which will preserve the Transat and Air Transat brands and keep the head office and key functions in Montreal.

Transat shares dropped 95 cents or more than seven per cent to $12.54 in mid-afternoon trading Wednesday.