WestJet to be acquired by Onex in $5B deal
Private equity firm Onex Corporation is acquiring Canada's WestJet Airlines and taking the company private in a multi-billion dollar deal.
WestJet Airlines Ltd. announced the impressive transaction, which is valued around $5 billion, on Monday. Onex Partners, Onex’s private equity platform, will oversee the deal.
"Since our first flight in 1996, WestJet has been singularly focused on providing better options for the Canadian traveling public and this transaction retains that commitment," Clive Beddoe, WestJet's founder and chairman, said in an online 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. 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."
Per the agreement, Onex Corporation will buy all of WestJet's outstanding shares for $31.00 each. WestJet will then function as a privately-held company.
"The purchase price represents a 67 percent premium to Friday’s closing share price and a 63 percent premium to WestJet’s 20-day volume-weighted average trading price," WestJet explained in a news release.
Tawfiq Popatia, a managing director at Onex, called WestJet one of Canada's "strongest brands" and said the firm was eager to work with the brand.
“We have tremendous respect for the business that Clive Beddoe and all WestJetters have built over the years. WestJet is renowned internationally for its unparalleled guest experience and employee culture. We’re thrilled to be partnering with WestJetters and continuing this remarkable Canadian success story,” Popatia added in a statement.
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The deal is much-needed for WestJet, which saw a 23-percent drop in its stock over the past five years as Air Canada has soared, according to Bloomberg.
George Ferguson, an analyst for Bloomberg, said Onex could help ensure WestJet's future success.
"Onex is a very aviation-focused fund so they know the space,” he told the publication. “WestJet is looking for growth, which will be hard to find inside Canada as the market is relatively small.”