Transat sinks 22% after Air Canada scraps buyout deal

Transat’s shares slumped more than 22% on Monday after Air Canada scrapped its C$188.7m buyout deal for the tour operator due to antitrust hurdles in Europe. The failed takeover prompted several analysts to lower their ratings on Montreal-based Transat, whose business has suffered because of COVID-19. “The catastrophic impact of the pandemic, Transat’s liquidity requirements, the tenuous state of the recovery, and the elimination of a formal takeover offer for the company justify a ‘reduce’ recommendation,” TD Securities analyst Tim James wrote in a note. Some analysts also raised doubts on whether other suitors, including Quebec businessman Pierre Karl Péladeau (PKP), would come through given Transat’s financing needs of at least $500m. “We would not yet assume that PKP will honour his C$5 per share offer or even buy Transat, considering that Transat stated last month that his proposal lacked evidence of financing to support a deal,” Scotiabank analyst Konark Gupta said in a note.<br/>