Transat AT shares soar after disclosing talks about possible sale of company

MONTREAL — Shares of Transat AT Inc. soared more than 40 per cent Tuesday after the tour and travel company announced preliminary talks regarding the possible sale of the company.

On the Toronto Stock Exchange, shares of the parent company of Air Transat, gained more than 43 per cent, or $2.44, at $8.11 in midday trading. Shares reached a high of $8.85, which was still short of its 52-week high.

The Montreal-based company said before its annual meeting that it is in talks with more than one party regarding a potential transaction following expressions of interest it received.

Transat said it has formed a special committee of independent directors to evaluate the proposals with the assistance of financial and legal advisers.

“I want to reiterate that the discussions are at a preliminary stage and no decision has been made on a potential transaction,” Transat AT chief executive Jean-Marc Eustache told shareholders at the beginning of the meeting.

The company has embarked on a financial turnaround and plans to build a network of hotels on sun destination beaches in the hope that this will better position it in the face of increased competition from Canadian rivals such as Air Canada Rouge, WestJet Vacations and Sunwing Airlines.

Transat did not name the potential bidders, but analyst Benoit Poirier of Desjardins Capital Markets said they could be the same groups that have expressed interest in Thomas Cook.

While the stock price has surged, Poirier says it was still well below Transat’s “intrinsic value” which he has conservatively pegged at $12 per share based on surplus cash, value of land and earnings.

Air Transat was founded 33 years ago by a group of businessmen, including Eustache and current Quebec Premier Francois Legault, who left the company in 1997 before making the leap into politics.

The main shareholder of the tour operator — which has some 5,000 employees — is Letko, Brosseau and Associates with a stake of 18.14 per cent and the Quebec Federation of Labour’s Solidarity Fund with 11.58 per cent. The Caisse de depot et placement du Quebec holds a 5.84 per cent interest.

Transat offers vacation packages, hotel stays and air travel under the Transat and Air Transat brands.

Companies in this story: (TSX:TRZ, TSX:AC, TSX:WJA)

The Canadian Press