July 4 (Reuters) - Real estate developer Group Mach Inc has dropped its C$528 million ($405 million) takeover proposal for Transat AT Inc after the Canadian tour operator accepted a lower offer from Air Canada last week.
Group Mach President Vince Chiara told Reuters on Thursday that if Transat wanted to reach out, the ball was in Transat’s court. The Transat board has already accepted Air Canada’s C$13 per share bid, over Group Mach’s C$14 a share offer.
Group Mach’s proposal for Transat became “null and void” once the leisure company’s board accepted Air Canada’s offer as it was one of the conditions set by the real estate developer, Mach’s executive vice-president of mergers and acquisitions Alfred Buggé said.
Mach will never submit a “Superior Proposal” as defined under its initial proposal, Buggé added.
Mach’s offer had raised questions since the company first said it needed government financing to complete the deal, a condition it waived before the deal with Air Canada was announced.
Transat’s agreed deal with Air Canada requires the approval of two-thirds of Transat shareholders, with voting due in August. Some Transat shareholders have opposed Air Canada’s lower offer.
A portfolio manager at PenderFund Capital Management, which holds 3.09% of Transat shares, had said last week that they did not believe Air Canada’s offer reflected the value of the company.
Transat’s largest shareholder Letko, Brosseau and Associates had also urged the company to drop the Air Canada deal, The Globe and Mail had reported in May.
PenderFund was not available for comment while Letko, Brosseau and Associates did not immediately reply to a request for comment on Thursday.
Shares of Transat had risen more than 34% since the talks with Air Canada first began in May to trade above even Group Mach’s offer but have fallen since the airline’s bid was accepted. They fell 8% on Wednesday and were trading up about 2% at C$12.66 on Thursday.
Both Air Canada and Transat declined to comment. ($1 = 1.3039 Canadian dollars) (Reporting by Debroop Roy in Bengaluru and Allison Lampert in Montreal Editing by Chizu Nomiyama)