Economy

WestJet to be acquired by Onex in $5B deal

WestJet to be acquired by Onex in $5B deal

Twenty years ago, it teamed up with American Airlines' parent company AMR Corp.in a hostile $1.8-billion bid, plus the assumption of deb, t to acquire and merge Canadian Airlines - then the country's second-biggest carrier - and Air Canada.

Shares in the airline closed at $18.52 on Friday.

"WestJet is renowned internationally for its unparalleled guest experience and employee culture".

WestJet chief executive Ed Sims, who will remain CEO, said "there are no job losses planned as a direct effect of this transaction".

The companies announced Monday morning that they had reached a definitive agreement for the all-cash transaction, which is expected to close in late 2019 or early 2020.

Onex, founded in 1984 by Schwartz who started out at Bear Stearns & Co in the 1970s, approached WestJet's board in March.

"Since our first flight in 1996, WestJet has been singularly focused on providing better options for the Canadian traveling public and this transaction retains that commitment", said Clive Beddoe, WetJet's Founder and Chairman.

OKC firefighters rescue window washers near top of Devon Tower
The corporate offices of the Oklahoma City-based energy company Devon Energy Corp are located in the Devon Tower. Several windows of the building were broken as the scaffold swung around.

"I am particularly pleased that WestJet will remain headquartered in Calgary and will continue to build on the success that our 14,000 WestJetters have created", Beddoe said in a statement. "This announcement has many workers very nervous about their future and anxious that the recent arbitrary changes the company has been making might only be the start of things to come", said Unifor Organizing Director Kellie Scanlan.

Onex also failed in its effort in 2007 as part of a consortium to buy Australia's Qantas Airways Ltd. The airline has reported declining net profit for each of the last three years, hurt by rising fuel costs, pressure on ticket prices and other issues.

WestJet (WJA.TO) said Onex (ONEX.TO) first approached it about the prospect of a takeover in March.

Popatia said the new foreign ownership threshold - raised to 49 per cent from 25 per cent after amendments to the Canada Transportation Act - "had nothing to do with" its decision, stating that Onex Partners - the company's flagship private equity fund - is the sole equity provider.

WestJet's board of directors has unanimously recommended shareholders vote in favour of the deal at a meeting expected to be held in July.

George Ferguson, an analyst for Bloomberg, said Onex could help ensure WestJet's future success.

"We do not believe this transaction dramatically alters the competitive landscape, at least negatively", Canaccord Genuity analyst Doug Taylor said.