TORONTO — Transat AT shares plunged as much as 22.6 per cent in the first day of trading after Air Canada pulled the plug on its takeover of the Montreal-based tour operator over Europe’s unwillingness to approve the deal.
Transat shares decreased to a low of $4.25 and were down $1.02 or 18.6 per cent at $4.47 in early Monday trading.
Air Canada shares gained 58 cents or 2.2 per cent at $27.03 on the Toronto Stock Exchange.
Canada’s largest airline announced on Good Friday that its $190-million purchase of Transat was dead.
Walter Spracklin of RBC Dominion Securities says that while he expected Air Canada to make changes to win the required approvals from the European Commission, he didn’t believe it was in the airline’s best interest to put forward an “an uneconomic remedy package that could jeopardize its future ability to compete internationally.”
He adds that the $12.5-million termination fee was immaterial, representing less than one per cent of his estimated $3.8-billion cash burn for 2021.
Companies in this story: (TSX:AC, TSX:TRZ)