Onex agrees friendly takeover of WestJet for CA$5 billion

©WestJet

Onex Partners, the private equity platform of Toronto-based Onex Corporation, will lead the investment buyout of Canada’s second-largest commercial carrier WestJet for an agreed figure of CA$3.5 billion, plus a further CA$1.5 billion in assumed debt. The announcement today comes two months after Onex first approached the board of WestJet in March. Onex will pay CA$31.00 per share, a 67% premium on Friday’s closing price of CA$18.52 in Toronto. The carrier’s share price had fallen 17% in the past 12 months amid rising fuel costs and soft revenues. In the same period, WestJet’s rival Air Canada had posted a 58% increase in share value.

“Onex’ aerospace experience, history of positive employee relations and long-term orientation makes it an ideal partner for WestJetters, and I am excited about our future,” Clive Beddoe, WestJet’s founder and chairman, said in the statement. The deal comes the week after WestJet posted a 33% increase in first-quarter profit of CA$45-million, despite having 13 Boeing 737 Max planes grounded as a result of safety concerns about the new Boeing jets.

This is not Onex’ first venture into the aerospace industry, having tried to by Air Canada in 1999, only to be thwarted by then existing ownership regulations. More recently Onex acquired Spirit Aerosystems from Boeing Co in 2005, exiting its investment in 2014, having made US$3.2 billion. This current deal will be put to the shareholders with a recommendation of acceptance by the Board of Directors at WestJet and the deal is expected to finalize towards the end of 2019 or into 2020.

Founded in 1996, WestJet employs 14,000 people and has a fleet of about 180 planes that fly to more than 1,000 destinations. Founded in 1984, Onex Corp manages CA$31 billion of assets. (US$1.00 = CA$1.35 at time of publication.)

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