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WestJet has announced that independent proxy advisory firms, Institutional Shareholder Services Inc. (ISS) and Glass, Lewis & Co., have both recommended shareholders vote for the proposed acquisition of WestJet by Onex Corporation at the upcoming special meeting of shareholders and optionholders of WestJet being held on July 23, 2019 at 10:00 a.m. MDT at the WestJet Campus.
At the meeting, securityholders will be asked to vote on a special resolution approving an arrangement under Section 193 of the Business Corporations Act (Alberta) involving WestJet, Kestrel Bidco Inc., an affiliate of Onex, and the securityholders, pursuant to which the purchaser will, subject to the terms and conditions sets out in the arrangement agreement between WestJet and the purchaser dated May 12, 2019, acquire all of the issued and outstanding shares of WestJet at a price of $31.00 per share in cash.
ISS and Glass Lewis are two leading independent, third-party, proxy advisory firms which, among other services, provide proxy voting recommendations to pension funds, investment managers, mutual funds and other institutional shareholders.
In reaching its conclusion, ISS noted: “The rationale behind the proposed transaction appears reasonable as current shareholders will get to exit their investment at a significant premium and at multi-year highs for WestJet’s share price. The cash consideration provides certainty of value, and it appears unlikely that a better offer will be made for the company.”
Glass Lewis noted in its report: “We believe that the merger consideration represents a compelling exit valuation and an attractive market premium for the company’s shareholders. In the absence of a superior competing offer, we believe that the arrangement agreement warrants shareholder support at this time.”
The independent special committee of the board of directors of WestJet formed in connection with the arrangement and the board considered a number of factors, including the some of the principal factors set forth below, in assessing the arrangement. See the circular (defined below) for the discussion of all the principal factors and other considerations relating to the board’s recommendation.
The view of the special committee and the board that the value offered to shareholders under the arrangement is more favourable to shareholders than the potential value that could result from remaining a publicly traded company and continuing to pursue the company’s strategic business plan.
Having regard to the regulatory constraints facing any potential acquiror, the magnitude of the acquisition of the company and the nature of the company’s business, it is highly unlikely that any other party or parties would be capable of paying, and be prepared to pay, a higher price to acquire the company.
The consideration to be paid to the shareholders of $31.00 cash per share represents a premium of 67 per cent over the closing price of the shares on May 10, 2019 (the last trading day prior to the public announcement of the arrangement), and a premium of 63 per cent over the 20 day volume-weighted average trading price for the shares ended on such date.
The consideration to be paid to shareholders of $31.00 cash per share (other than the rollover securityholders, as such term is defined under the arrangement) pursuant to the arrangement is all cash, which provides shareholders with certainty of value and immediate liquidity.
Under the terms of the arrangement, the company is permitted to pay its regular quarterly cash dividend, not in excess of $0.14 per share, consistent with the current practice of the company, pending completion of the arrangement.