The action kicked off Monday, when Onex Corp. struck an agreement to purchase WestJet Airlines Ltd. for $3.5-billion.
Under the terms, Onex would pay $31 for all outstanding shares, or a 67-per-cent premium to Friday’s closing price. The deal, which is subject to shareholder and regulator approvals, would take Canada’s No. 2 carrier private, after spending much of its lifetime as a publicly traded company. After including WestJet’s debt, the deal is the biggest private-equity takeover of an airline in history, according to data provider Refinitiv.
The airline industry is notoriously difficult and highly competitive; in WestJet’s case, rising fuel costs and the threat of a pilots’ strike have offered recent setbacks. “WestJet was generally well funded and was already embarking on a large and highly competitive expansion plan,” Mr. Taylor said in his client note. “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.”WestJet currently employs 14,000 people, has a fleet of roughly 180 planes, and flies to more than 100 destinations throughout the world.
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