Hotel growth drives Mach’s desire to compete with Air Canada for the purchase of Transat

11 June, 2019

Interest by Quebec property developer Mach in acquiring Canadian travel conglomerate Transat seems fuelled by a desire to exploit hotel room growth in Mexico and the Caribbean. Mach has surprised markets by offering CAD14 per share for Transat, which is higher than Air Canada's bid of CAD13 per share. Air Canada and Transat are in the midst of wrapping up an exclusive negotiating period.

Transat's CAD750 million plan to add 5,000 hotel rooms by 2022 in Mexico and the Caribbean likely sparked Mach's decision to launch a competing bid from the travel company. Mach has declared that it would increase that total to 12,000 rooms in six years, and has secured a pledge from TM Grupo Inmobiliario to invest CAD15 million in Transat for a minority stake in the company. TM was a residential real estate developer in Spain and is also the preferred hotel supplier for Transat in Mexico.

Mach's executives are also working to allay any concerns about Transat's airline - Air Transat. Executives from the real estate firm told the Canadian Press that Air Transat, for now, is an integral part of Transat's business.

After Air Canada made its offer for Transat public, there was speculation over whether Canada's largest airline would keep Transat's hotel business, and after Mach made its offer Air Canada stressed it will "create an industry leading, Quebec-based leader in the global leisure travel industry". Now it is up to Air Canada to decide if creating that leader in the global travel industry is worth upping its bid for Transat.