WestJet to be sold to Onex Corporation in $5B deal

Onex shakes up Canada’s airline industry with all-cash deal to buy WestJet

"The 'why now?' is valuation", said AltaCorp Capital analyst Chris Murray.

Launched by Clive Beddoe in 1996, Westjet flies to more than 100 destinations in North America, Central America, the Caribbean and Europe.

It was announced on Monday morning that WestJet Airlines Ltd. has been acquired by Toronto-based Onex Corporation ("Onex").

This isn't Onex's first attempt to acquire an airline. The corporate battled landed in court, where Onex was rebuffed, and its bid withdrawn. Air Canada shares jumped 5.5 percent, while the broader Canadian stock index was down 1%.

The price represents about a 67 per cent premium to the shares, which closed at $18.52 on Friday.

WestJet's board formed a special committee to consider the offer after an approach by Onex in March.

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Analysts said the Onex bid is rich by airline standards, representing a premium to the valuations given to Air Canada and publicly traded USA airlines.

WestJet has been sold and the company fetched quite the haul.

Shares of WestJet Airlines Ltd surged as much 63.3% to C$30.24 - highest since March 2015.

"Privatizing tends to be easier to generate value longer term", said Chan.

Even before the global grounding of Boeing's 737 MAX jets in March, WestJet's earnings had slipped as it worked to contain costs as its workforce unionized and was spending money on bold growth plans to expand worldwide travel, introduce first class cabins and launch a budget carrier called Swoop.

Onex is buying WestJet and taking it private.

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The board say that they have unanimously agreed to the deal, and have recommended shareholders vote for the deal in a special meeting that is to be convened.

"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".

"I am particularly pleased that WestJet will remain headquartered in Calgary and will continue to build on the success that our 14,000 WestJetters have created", Beddoe said in a statement.

"Other workers at WestJet are able to sit down at the table and negotiate with the company when changes are made because they are unionized", Scanlan said. "Integral to this relationship is a commitment to our employees, and our unique ownership-driven culture", WestJet's chief executive Ed Sims said.

In addition to shareholder approval, the transaction must also receive the blessing of Transport Canada and the Canadian Transportation Agency.

"We do not believe this transaction dramatically alters the competitive landscape, at least negatively", Canaccord Genuity analyst Doug Taylor said.

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"WestJet was generally well funded and was already embarking on a large and highly competitive expansion plan", he wrote. "In our view, a private equity owner of an airline is likely to remain rational with respect to its approach to yields and profitability vs. market share", he said in a note to clients.

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