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What did you buy? What might you buy??

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  • Nov 24th, 2020 10:08 am
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Deal Guru
Jan 27, 2006
14774 posts
7709 upvotes
Vancouver, BC
admiralackbar wrote: Wouldn't be surprised if the buyer is AC
AC has already invested a chunk of money into the CHR so it's possible. If it is someone else, AC would probably make a counter bid as I would doubt that they would want to deal with another partner after signing that long term contract with CHR management not so long ago.
Deal Fanatic
May 22, 2003
5212 posts
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Vancouver
craftsman wrote: AC has already invested a chunk of money into the CHR so it's possible. If it is someone else, AC would probably make a counter bid as I would doubt that they would want to deal with another partner after signing that long term contract with CHR management not so long ago.
Wouldn't it be bad optics for them to buyout another company just as the government is about to launch an airline bailout package though?
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Sep 19, 2004
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craftsman wrote: AC has already invested a chunk of money into the CHR so it's possible. If it is someone else, AC would probably make a counter bid as I would doubt that they would want to deal with another partner after signing that long term contract with CHR management not so long ago.
If AC buys CHR after Air Transat, damn they'll have almost true monopoly (WestJet is meh... poor ONEX bought WJA at the high's, only to face Covid-19)
I have both AC and CHR stocks (at deep loss), would be happy if they even return to breakeven within 5 years ...
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Deal Addict
Dec 4, 2011
1304 posts
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Montreal
To expand, it would be right up AC's playbook to buy back Jazz at this deflated price, get the bailout to save jobs, and spin it off again in a few years at higher price.

And yes, they want a monopoly (TS was great for YUL fares) plus WS so it looks like it is not.
Deal Expert
May 30, 2005
44544 posts
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Richmond Hill
craftsman wrote: Realistically, for CHR, an offer of $4.50 would be an opportunistic bid on the part of a potential buyer. I suspect that once a vaccine has been announced, CHR would have jumped to about $4 even without an offer. After all, at $4, that's still 50% off the pre-COVID price so that would be factoring in a lot less business already.

I also suspect that the CHR isn't keen on the idea of selling at this point in time but needed to do the press release to account for the move in the share price.
$4 would be very cheap if a vaccine is announced, IMO. We got to above $4 even during the pandemic.
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Deal Expert
May 30, 2005
44544 posts
5113 upvotes
Richmond Hill
admiralackbar wrote: To expand, it would be right up AC's playbook to buy back Jazz at this deflated price, get the bailout to save jobs, and spin it off again in a few years at higher price.

And yes, they want a monopoly (TS was great for YUL fares) plus WS so it looks like it is not.
Sounds like what happened to Aimia :P
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Jr. Member
Sep 27, 2020
111 posts
68 upvotes
Actuary20 wrote: Beautiful breakout. If more volume comes, it'll test 52wk highs.
Ugly end to the week and now a gap to fill at 12. For those looking for a long entry in LAC, best to wait for that gap to fill.
Deal Guru
Jan 27, 2006
14774 posts
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Vancouver, BC
notenoughsleep wrote: Wouldn't it be bad optics for them to buyout another company just as the government is about to launch an airline bailout package though?
Maybe but that's the same with another company as well. We have seen something similar situation over at IPL when a bid came into the company causing the share price to spike but the bidder was never formally announced but was later discovered that it was Li Kai Shing that made the offer. Might be a similar situation where someone made a stinker bid that undervalued the company with the hopes the company would be stupid enough to tender but the bidder wasn't really seriously going after the company to take it to the shareholders as a hostile bid.
Deal Guru
Jan 27, 2006
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jerryhung wrote: If AC buys CHR after Air Transat, damn they'll have almost true monopoly (WestJet is meh... poor ONEX bought WJA at the high's, only to face Covid-19)
I have both AC and CHR stocks (at deep loss), would be happy if they even return to breakeven within 5 years ...
Plus, if AC was looking to do it, they would have done it before plough millions into CHR as part of the current deal.
Deal Guru
Jan 27, 2006
14774 posts
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Vancouver, BC
Jon Lai wrote: $4 would be very cheap if a vaccine is announced, IMO. We got to above $4 even during the pandemic.
Exactly.
Deal Guru
Jan 27, 2006
14774 posts
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Vancouver, BC
Jon Lai wrote: Sounds like what happened to Aimia :P
Aimia was actually different. AC squeezed them like a lemon before doing the takeover. If AC wanted to do that, they would not have extended the deal that they had with CHR. Instead, they would have signed some other players to take over a couple of their regional routes just like they did in the past with a regional carrier in the US several years ago. Once CHR left the heat, they would have put in a bid to buy the airline for a fraction of the previous price and then cancel the contract with the previous operators. The only issue would have been the union deals (ie I don't believe the government would have an issue as CHR was part of AC in the past) - CHR's staff are paid a lot less than mainline AC staff so if AC purchased CHR, they would have to fight the union over wages which would probably end with higher labour cost for the regional operations reducing any financial reasons to buy out CHR.
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Jun 2, 2020
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Is anyone thinking about picking up more CHR at the current prices?
Deal Guru
Jan 27, 2006
14774 posts
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Vancouver, BC
PaddyM77101 wrote: Is anyone thinking about picking up more CHR at the current prices?
Too risky without any more details... Just look at the price action of IPL after the news of a buyout offer and what happened to the price of the stock as time dragged on without any other concrete news after IPL rejected the takeover offer. Within a month, the price of IPL dropped back down to where it was trading before the buyout offer news came out. Right now, with the recent price action, the price basically reflects a vaccine announcement or an announced generous government bailout offer without either of them happening. Since CHR didn't spellout any more details of the offer (which they most certainly have all of the details), I suspect that CHR management isn't exactly pleased with the offer and will probably reject it. So, we will probably see similar price action happening as IPL.

Will they come back with a better offer? Maybe. Or they could be just kicking the tires to see if CHR was going to accept their low-ball offer and we will never hear from them again.

CHR's price may hold if there is more vaccine news or better rumblings about a bailout.

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