Aimia accepts Air Canada's sweetened $450M bid for Aeroplan

Aimia accepts Air Canada's sweetened $450M bid for Aeroplan
By Natalie WongBloomberg News
Scott Deveau
Tues., Aug. 21, 2018

A group led by Air Canada agreed to buy Aimia Inc.’s Aeroplan for $450 million in cash, ending a takeover battle for one of Canada’s most popular loyalty programs.

Air Canada and its banking partners sweetened their bid for Aeroplan, winning over Aimia’s board and an activist shareholder that was seeking a higher price. Air Canada initially made a $250 million unsolicited offer, and later boosted that to $325 million. Air Canada and its backers will also assume $1.9 billion of Aeroplan Miles liabilities, the companies said in a statement 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,” said Calin Rovinescu, president and chief executive officer of Montreal-based Air Canada.

Air Canada’s partners on the purchase include Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and Visa Canada.

The deal would return Aeroplan to Air Canada almost 25 years after it was launched by Canada’s biggest carrier. Following Air Canada’s bankruptcy restructuring, its parent company, ACE Aviation Holdings, spun off Aeroplan Income Fund in an initial public offering in 2005, raising $250 million. It was rebranded Aimia in 2011.

Aimia’s shares have been under pressure since Air Canada announced plans last year to launch its own loyalty program and sever ties with Aeroplan. The company also faced a key date in 2024, when credit-card contracts with TD and CIBC expire.

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Earlier this month, Aimia rejected the Air Canada-led group’s bid for the loyalty program, asking for $450 million and revised terms. Mittleman Brothers LLC, which owns about 17.6 per cent of the shares, argued the program was worth more than $1 billion based on its estimates. A representative for Mittleman wasn’t immediately available for comment.

There is also interest in other Aimia assets. In July, Aimia rejected a $180 million bid from Grupo Aeromexico for a minority stake in the PLM Premier rewards plan operator, saying the offer was too low.

Aimia closed yesterday in Toronto at $3.84, for a market value of $585 million. The stock traded at almost $20 in 2014.