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It has just been announced that WestJet is acquired by Onex Corporation, a leading private equity firm. The value of the transaction is approximately $ 5 billion, including assumed debt.
This is a 100% cash transaction and, according to the terms, Onex will acquire all of WestJet's outstanding shares at a price of $ 31, which means that WestJet will operate as a private company. The purchase prices represent:
- A premium of 67% over the closing price on Friday
- A premium of 63% over WestJet's 20-day volume weighted average trading price
WestJet 787
The Founder and Chairman of WestJet's Board stated the following:
"Since our first flight in 1996, WestJet has been singularly committed to providing better options for the Canadian traveling public and this transaction maintains this commitment. I am particularly pleased that WestJet retains its headquarters in Calgary and continues to build on the success of our 14,000 WestJetters. Onex's aerospace experience, its history of positive working relationships and long-term orientation make it an ideal partner for the WestJetters, and I am excited about our future. "
Tawfig Popatia, General Manager at Onex, said:
"WestJet is one of the strongest brands in Canada and we respect the company that Clive Beddoe and all WestJetters have built over the years. WestJet is renowned around the world for its unparalleled customer experience and corporate culture. We are excited to partner with WestJetters and continue this remarkable Canadian achievement. "
This is obviously a huge development for WestJet. The airline has been extremely popular with Canadian travelers for years, but has recently faced several challenges:
- The airline began to have more manpower problems than in the past
- Many will say that the airline, like WestJet, has shown itself to be a bit too ambitious with its previous simplified business model:
WestJet Business Class 787
Bottom line
This acquisition represents a great bonus for WestJet shareholders, although I am generally suspicious of private equity firms changing the business model of an airline.
It will be interesting to see what this means for WestJet's future, especially as the company is moving in different directions.
What do you think of Onex's acquisition of WestJet?
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