WestJet sold in deal valued at $5B

Andrew Cummings
May 16, 2019

Private equity firm Onex Corp.is making its long-coveted leap into aviation by signing a friendly deal to buy WestJet Airlines Ltd.in an all-cash transaction of $3.5 billion.

Under the agreement announced Monday, Onex will pay $31 per share for WestJet, which will continue to operate as a privately held company. By the end of the trading day on Monday, stock in WestJet was trading at $29.61 per share, up from $18.52 when the Toronto Stock Exchange closed Friday.

Launched by Clive Beddoe in 1996, Westjet flies to more than 100 destinations in North America, Central America, the Caribbean and Europe.

The Onex bid follows a deal last week where low-priced Latin American airline Viva Air received a $50 million investment from US capital fund Cartesian Capital Group that it will direct toward expansion.

Tawfiq Popatia, a managing director at Toronto-based Onex, expressed confidence in the airline's trajectory, which has seen it evolve from a low-priced regional carrier to a full-service global airline targeting higher-yield business passengers.

WestJet CEO Gregg Saretsky on the airline's outlook and growth.

The WestJet purchase will be led by Onex Partners, Onex's private equity platform focused on larger investments.

WestJet would be Onex's second recent public-to-private transaction, following on the heels of the acquisition of wealth manager Gluskin Sheff in March, Chan, the Canaccord analyst, noted.

"Onex's aerospace experience, history of positive employee relations and long-term orientation makes it an ideal partner for WestJetters, and I am excited about our future", Beddoe said in a statement.

"WestJet is renowned internationally for its unparalleled guest experience and employee culture", he said.

"The WestJet board of directors, having received and considered the recommendation of the special committee, determined that the transaction is in the best interests of WestJet and unanimously recommends that WestJet shareholders vote in favor of the transaction at the special meeting of shareholders to be held to approve the transaction, " it said. "In our view, a private equity owner of an airline is likely to remain rational with respect to its approach to yields and profitability (versus) market share".

The deal is subject to a number of conditions, including court and shareholder approval and receipt of certain regulatory approvals, including under the Canada Transportation Act.

This time around, the assessment seems to be that Onex is a suitable buyer.

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