Onex Corp. agreed to acquire WestJet Airlines Ltd. for C$3.5 billion ($2.6 billion), taking the Canadian carrier private in one of the buyout firm’s biggest deals.
- The private equity firm agreed to pay C$31 a share, a 67% premium to the airline’s closing price May 10 in Toronto trading. The deal is valued at C$5 billion including debt, Toronto-based Onex said in a statementMonday, and is expected to close by early 2020, subject to customary conditions.
Key Insights
- Onex, Canada’s largest private equity firm, with about $31 billion in assets under management, in 1999 tried unsuccessfully to acquire Air Canada and merge it with Canadian Airlines in a C$2.4 billion hostile bid.
- The WestJet acquisition ranks among the biggest for Onex over the past decade, according to data compiled by Bloomberg. Among the firm’s recent large deals were Swiss juice-box maker SIG Combibloc Group AG for about $4.4 billion in 2014 and a Thomson Reuters Corp. unit for $3.5 billion in 2016.
- WestJet said May 7 that the Calgary-based carrier was on track to reach its margin expansion target of $120 million this year. It’s also working toward an annualized savings target of $200 million by the end of 2020.
- The airline suspended all financial guidance for the year following the grounding of the Boeing Co. 737 Max, yet Chief Executive Officer Edward Sims has said there are no planned changes to any Boeing orders or deliveries.
Market Reaction
- WestJet had climbed 2.9% this year through May 10, while the Standard & Poor’s/ Toronto Stock Exchange index advanced 14%.