Canadian Manufacturing

Air Canada led group seeks to buy Aeroplan business in $2.25B offer to Aimia

The group said the offer to purchase the loyalty program would expire Aug. 2


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A group led by Air Canada has offered to buy the Aeroplan loyalty business from Aimia Inc. in a deal valued at $2.25 billion, including points liabilities they would assume.

The consortium said Wednesday the proposed transaction would provide continuity for Aeroplan members as well as customers of the Montreal-based airline, Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and the Visa credit card company – which all have long-standing relationships with Aimia.

“If completed, the proposed transaction 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, safeguarding their points and providing convenience and value for millions of Canadians,” the group said in a statement on Wednesday.

It wasn’t immediately clear whether Aimia’s board would recommend the offer, which the consortium said was worth the equivalent of $3.64 per share. The group said the offer would expire Aug. 2 but such deadlines are often amended.

Aimia stock was up nearly 35 per cent shortly after the Toronto Stock Exchange opened, trading at $3.37.

Under the proposal, a corporation to be formed by the consortium would acquire Aimia’s loyalty business, including roughly $2 billion worth of Aeroplan points obligations as of March 31, 2018, for $250 million in cash. The total purchase price, in turn, is valued at approximately $2.25 billion.

Aeroplan’s future has been in doubt since Air Canada announced in May 2017 that it planned to launch its own loyalty rewards plan in 2020.

Over the past 14 months, Aimia’s stock had fallen to $2.50 as of the close on Tuesday, down from $8.84 prior to Air Canada’s departure announcement.

Air Canada created Aeroplan as in-house loyalty program but it was spun off as an independent business as part of a court-supervised restructuring of Canada’s largest airline. At the time, CIBC was Aeroplan’s main bank partner.

Since 2014, TD has been Aeroplan’s main Visa card partner although CIBC continues to offer Aeroplan cards rewards points that can be redeemed for Air Canada flights and other merchandise.

Aimia, CIBC and Visa Canada were not immediately available for comment. TD declined to comment.

 

News from © Canadian Press Enterprises Inc. 2019

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