AIR Canada has gone to court in an attempt to have the hostile bid from Onex Corporation declared null and void.
Toronto-based Onex announced last month it wanted to buy Air Canada and Canadian Airlines, amalgamate them and rename the airline Air Canada (Travel Weekly August 30). Air Canada has asked the Quebec Superior Court to throw out Onex’s acquisition plans because it claims the proposal contravenes Canadian law.
Air Canada’s argued that Onex’s bid is illegal because, if it is successful, it would mean the conglomerate holding more than 10% of Air Canada. This was ruled the maximum allowed when the airline was privatised in 1988.
Onex accepts that the rules need to be changed to allow its planned £2.4bn merger, but believes the Canadian government will move to give Canada a single, stronger airline. A verdict on Air Canada’s court case is expected shortly.
Last week Air Canada recommended its shareholders reject the Onex bid. Its board argued the proposal undervalued the airline and would put it under the control of American Airlines, a 33% shareholder in Canadian. Canadian Airlines shareholders have been asked to accept the deal.