More than a decade after it spun off the business, Air Canada wants to buy back its reward program for C$2.25 billion ($1.72 billion).
The Canadian airline announced that it was forming a corporation with the Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, and Visa Canada Corporation to acquire Aimia’s Aeroplan loyalty business (including approximately $2 billion of Aeroplan points liability at March 31, 2018) for $250 million in cash, representing a total purchase price of approximately $2.25 billion.
Air Canada is Canada’s largest domestic and international airline, serving more than 220 airports on six continents. It provides flights to 64 airports in Canada, 59 in the United States and 98 in Europe, the Middle East, Africa, Asia, Australia, the Caribbean, Mexico, Central America and South America.
According to a press release, the proposal is based on an estimated market equivalent value of $3.64 per Aimia share, a 52.3 percent premium to the 30-day VWAP and a 45.6 percent premium to spot closing price as of July 24, 2018.
In addition, the market equivalent value is comprised of the Aeroplan loyalty business proposal value of $1.64 per Aimia common share, as well as non-Aeroplan loyalty program net assets valued at $2 per common share based on fair market value estimates.
Air Canada added that the if the proposal is approved, it would result in a positive outcome for Aimia shareholders and Aeroplan members, allowing for a smooth transition of Aeroplan members’ points to Air Canada’s new loyalty program launching in 2020.
To ensure the corporation gets a quick response, the proposal expires on August 2, 2018.
“Given Aimia’s current situation and future prospects, the Proposed Transaction delivers value to Aimia’s stakeholders,” the press release stated. “Air Canada, TD, CIBC and Visa are committed to engaging with Aimia’s board to complete a transaction and trust that Aimia’s Special Committee and Board of Directors, in discharging their fiduciary duties, will respond promptly by August 2, 2018. A timely completion of the transaction is essential for the continued participation of the parties.”
According to the Financial Times, Aimia said in a statement its special committee would consider whether the proposal was in the best interests of shareholders. The company also advised shareholders not to take any action regarding the offer.