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WestJet being bought out by Toronto's Onex Corp

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  • Sep 4th, 2019 10:45 am
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May 13th, 2019 8:37 am
Pete_Coach [OP]
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May 13th, 2019 8:37 am

WestJet Sold

Never saw this coming.

WestJet Airlines Ltd said on Monday it will be acquired by private equity firm Onex Corp in an all-cash deal for C$3.53 billion ($2.63 billion).

https://ca.finance.yahoo.com/news/westj ... ector.html
https://ca.finance.yahoo.com/news/onex- ... ll-brknews

Who is Onex?
https://en.wikipedia.org/wiki/Onex_Corporation
The Government cannot give to anybody anything that the Government does not first take from somebody else.
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69 replies
May 13th, 2019 8:39 am
StatsGuy
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Dec 20, 2018
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May 13th, 2019 8:39 am

Didn't see this coming, but I guess with the depressed WJA stock price , this was a good value for onex. Wonder if it also had to do with WestJet not being able to get enough capital with their depressed stock price .


Toronto Star: Onex signs agreement to buy WestJet in deal valued at $5B, including debt.

www.thestar.com/amp/business/2019/05/13 ... -debt.html
May 13th, 2019 9:23 am
michelb
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Jul 4, 2004
5969 posts
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Ottawa

May 13th, 2019 9:23 am

Wow! Never saw this coming either. Also seems like a huge premium to pay; shares currently trading around $18.50CND and they are paying $31CND
+1
May 13th, 2019 9:56 am
cardguy
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Apr 5, 2013
5418 posts
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hollywood pk

May 13th, 2019 9:56 am

Pete_Coach wrote: ↑ Never saw this coming.

WestJet Airlines Ltd said on Monday it will be acquired by private equity firm Onex Corp in an all-cash deal for C$3.53 billion ($2.63 billion).

https://ca.finance.yahoo.com/news/westj ... ector.html
https://ca.finance.yahoo.com/news/onex- ... ll-brknews

Who is Onex?
https://en.wikipedia.org/wiki/Onex_Corporation
not surprising...Gerald tried to buy AC about 20 years ago when that stock was undervalued (?)...if I remembered it properly, it made them come up with a poison pill to protect against this like many other company's....it also drove the share price up to about $20-$25
May 13th, 2019 10:10 am
Pete_Coach [OP]
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May 13th, 2019 10:10 am

cardguy wrote: ↑ not surprising...Gerald tried to buy AC about 20 years ago when that stock was undervalued (?)...if I remembered it properly, it made them come up with a poison pill to protect against this like many other company's....it also drove the share price up to about $20-$25
Paying a $13.50 premium over present share price to buy the shares is a pretty big commitment.
Onex does lots with the companies it buys, including splitting them up.
The Government cannot give to anybody anything that the Government does not first take from somebody else.
May 13th, 2019 10:33 am
TheHoffer
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Oct 6, 2008
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Winnipeg

May 13th, 2019 10:33 am

Too early to tell how this impacts loyalty programs? I have some WJ $ I'd have to burn off if they're thinking of scrapping it.
May 13th, 2019 10:37 am
McKinsey
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Oct 18, 2014
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HK

May 13th, 2019 10:37 am

As a shareholder, I'm very pleased. Now to focus on AC.
+1
May 13th, 2019 12:19 pm
webconfig
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Aug 17, 2010
111 posts
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GTA

May 13th, 2019 12:19 pm

Anyone know how this will work for shareholders? This may be a dumb question, but I own some WJA stock through Questrade and once the deal is complete, should I expect the shares to be automatically be sold at $31/share and converted to cash? Or will it be converted to ONEX.TO shares?
May 13th, 2019 12:54 pm
Conquistador
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May 13th, 2019 12:54 pm

webconfig wrote: ↑ Anyone know how this will work for shareholders? This may be a dumb question, but I own some WJA stock through Questrade and once the deal is complete, should I expect the shares to be automatically be sold at $31/share and converted to cash? Or will it be converted to ONEX.TO shares?
It's a straight cash deal so the former.
May 13th, 2019 1:20 pm
admiralackbar
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Dec 4, 2011
1524 posts
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Montreal

May 13th, 2019 1:20 pm

Hopefully they won't pull off an RBI/Tim Horton's fiasco.
May 13th, 2019 1:25 pm
thriftshopper
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SW corner of the cou…

May 13th, 2019 1:25 pm

Me wonders if Gerry wants to become a millionaire in the airline biz....
Cream rises to the top. So does scum.
+2
May 13th, 2019 7:24 pm
EastGTARedFlagger
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Feb 22, 2016
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May 13th, 2019 7:24 pm

Any chance Onex was one of the bidders for TS but decided to buy WS instead?
May 13th, 2019 7:48 pm
Latitude57
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May 13th, 2019 7:48 pm

EastGTARedFlagger wrote: ↑ Any chance Onex was one of the bidders for TS but decided to buy WS instead?
No. They confirmed they were not in discussions with TS.

I think this may be good for WS long term. We'll see how it goes.
Never argue with stupid people, they will drag you down to their level and then beat you with experience.
+1
May 13th, 2019 9:30 pm
mrweather
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Aug 29, 2011
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May 13th, 2019 9:30 pm

Onex will want a decent return and pretty quickly. They're like KKR but not a aggressive. Expect to see some pain at WS soon.
May 13th, 2019 10:50 pm
StatsGuy
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Dec 20, 2018
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May 13th, 2019 10:50 pm

Latitude57 wrote: ↑ No. They confirmed they were not in discussions with TS.

I think this may be good for WS long term. We'll see how it goes.
When was the last time it turned out well for customers or company who was subject of a takeover by a private equity firm? Their business model is squeeze money and any remaining value out of asset and then sell off for parts.
+2
May 13th, 2019 11:07 pm
EastGTARedFlagger
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May 13th, 2019 11:07 pm

Latitude57 wrote: ↑ I think this may be good for WS long term. We'll see how it goes.
StatsGuy wrote: ↑ When was the last time it turned out well for customers or company who was subject of a takeover by a private equity firm? Their business model is squeeze money and any remaining value out of asset and then sell off for parts.
In other words, this is great for WS investors in the short term as they all get to sell their shares at a nice premium, but will be bad for WS customers and employees in the long term with worse service, devalued loyalty programs, strikes/lockouts (if unionized), layoffs...
+3
May 14th, 2019 7:55 am
Dealmaker1945
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May 14th, 2019 7:55 am

EastGTARedFlagger wrote: ↑ In other words, this is great for WS investors in the short term as they all get to sell their shares at a nice premium, but will be bad for WS customers and employees in the long term with worse service, devalued loyalty programs, strikes/lockouts (if unionized), layoffs...
Read up a bit on Onex. They own and operate a lot of successful businesses for the long term. What would it gain them to pay such an inflated share price only to run the company into the ground? They don't micromanage their businesses, so expect them to look at long term strategies rather than short term tampering with loyalty programs etc. They also have the capacity to invest in the business. Right now, WJ is struggling to enter overseas markets since buying those new planes is so expensive. I hope they will be able to accelerate that strategy and become more of a competitor for AC. Remember, they originally wanted to buy AC.
+1
May 14th, 2019 8:17 am
StatsGuy
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May 14th, 2019 8:17 am

Dealmaker1945 wrote: ↑ Read up a bit on Onex. They own and operate a lot of successful businesses for the long term. What would it gain them to pay such an inflated share price only to run the company into the ground? They don't micromanage their businesses, so expect them to look at long term strategies rather than short term tampering with loyalty programs etc. They also have the capacity to invest in the business. Right now, WJ is struggling to enter overseas markets since buying those new planes is so expensive. I hope they will be able to accelerate that strategy and become more of a competitor for AC. Remember, they originally wanted to buy AC.
Their businesses have not been good for the actual growth of the business, employees or consumers (at least in the few general public focused businesses they have)

Onex doesn't have the capital to help WestJet grow. I see this more as turning ws into more of a niche carrier that it was instead of spending big money to try to crowd into a very crowded full service international airline that WestJet was trying to for a while before they got burnt . Onex is not and doesn't have the money for ws to burn through as it tried to grow and offer competitive service to full service carriers

Didn't say run it into the ground, said squeeze value out of it at expense of consumers and employees. I mean if we go by your midset, the equity fund that owned Sears and etc didn't want to run it into the ground, just squeeze value out of it
+1
May 14th, 2019 8:41 am
Dealmaker1945
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May 14th, 2019 8:41 am

StatsGuy wrote: ↑ Their businesses have not been good for the actual growth of the business, employees or consumers (at least in the few general public focused businesses they have)

Onex doesn't have the capital to help WestJet grow. I see this more as turning ws into more of a niche carrier that it was instead of spending big money to try to crowd into a very crowded full service international airline that WestJet was trying to for a while before they got burnt . Onex is not and doesn't have the money for ws to burn through as it tried to grow and offer competitive service to full service carriers

Didn't say run it into the ground, said squeeze value out of it at expense of consumers and employees. I mean if we go by your midset, the equity fund that owned Sears and etc didn't want to run it into the ground, just squeeze value out of it
Department stores were a special case were the real estate assets had more value than the retail business. But yes, those funds have been shameless with the employees. But I don't see how they can play that game with Westjet. I don't think they are going to make money selling off those 737's. Westjet has had enough employee troubles already, and I don't think a new employee war with layoffs and salary cuts is going to benefit them.

It will be interesting to see how they try to unlock and increase value - will they drop the international strategy and refocus on profitable North American routes? Will they sell a stake to a foreign partner like Delta?
+2

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