Air Canada-Led Consortium Signs Deal to Buy Aeroplan Program from Aimia

By Reynolds, Christopher | The Canadian Press, August 23, 2018 | Go to article overview

Air Canada-Led Consortium Signs Deal to Buy Aeroplan Program from Aimia


Reynolds, Christopher, The Canadian Press


Air Canada-led consortium to buy Aeroplan

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MONTREAL - An Air Canada-led consortium has reached a $450-million deal to acquire the Aeroplan loyalty program from Aimia Inc., earning plaudits from analysts but leaving questions about Aimia's future.

The group, which includes TD Bank, CIBC and Visa Canada Corp., has agreed to pay $450 million in cash and assume the approximately $1.9-billion liability associated with Aeroplan miles customers have accumulated.

"We are pleased to see that an agreement in principle has been reached as Aeroplan members can continue to earn and redeem with confidence," Air Canada chief executive Calin Rovinescu said in a statement on behalf of the consortium Tuesday.

"This transaction, if completed, should produce the best outcome for all stakeholders, including Aeroplan members, as it would allow for a smooth transition to Air Canada's new loyalty program launching in 2020, safeguarding their miles and providing convenience and value for millions of Canadians."

The agreement comes weeks after Aimia rejected an earlier offer from the consortium as too low and outlined that it believed $450 million would be a fair price, saying that a number of shareholders were upset with the low offer.

The price is up from an initial offer in July of $250 million in cash and the assumption of the reward point liability that was rejected by Aimia.

Aimia shares were up 9.4 per cent at $4.20 in afternoon trading after hitting a 52-week high of $4.60 earlier in the session. Air Canada shares jumped nearly eight per cent to $26.69.

Any deal between the consortium and Aimia, which had been seeking out new partners to offset the loss of Air Canada when a current agreement was set to end in 2020, would be a fruitful outcome for all stakeholders, said GMP Securities analyst Martin Landry.

National Bank Financial analyst Adam Shine, however, said he was "left wondering how Aimia could trumpet its Plan B strategy with such optimism and yet set a seemingly low Aeroplan value."

The Aeroplan deal is expected to close this fall.

The agreement, which is supported by Aimia's board and Mittleman Brothers, Aimia's largest shareholder that had previously opposed the lower offer, is subject to shareholder approval and other closing conditions.

Mittleman Brothers, which holds a 17.6-per-cent stake in Aimia, defended its acceptance of the deal and suggested a price tag of $1 billion -- which it demanded earlier this month -- now seemed unfeasible.

"We believe that our acquiescence in agreeing to sell Aeroplan for $450M in cash was the best available outcome for all Aimia stakeholders," the investment firm said in a statement Tuesday.

The bid would leave Aimia with more than $1 billion in cash to invest elsewhere, Mittleman Brothers said.

Christopher Mittleman, chief investment officer of the New York-based company, bristled earlier this month at a $325-million offer from the consortium, calling it "coercive" and "blatantly inadequate" in an open letter to Aimia's board. …

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