Glass Lewis, ISS recommend Onex’s $3.5 bln WestJet buyout


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Proxy advisors Glass, Lewis & Co and Institutional Shareholder Services Inc (ISS) have recommended shareholders of WestJet Airlines Ltd (TSX: WJA) vote for the company’s proposed acquisition by Onex Corp.

In May, the Canadian private equity firm offered to buy Calgary-based WestJet, Canada’s second-largest carrier, for $31 per share. The deal is valued at $3.5 billion, or $5 billion including debt.

Glass Lewis said the proposal “represents a compelling exit valuation and an attractive market premium” for shareholders.

WestJet shareholders will vote on the deal on July 23.

PRESS RELEASE

Independent proxy advisor firms recommend WestJet shareholders vote FOR the proposed acquisition of WestJet by Onex

CALGARY, July 10, 2019 /CNW/ – WestJet (TSX: WJA) (“WestJet” or the “Company”) is pleased to announce that independent proxy advisory firms, Institutional Shareholder Services Inc. (“ISS”) and Glass, Lewis & Co. (“Glass Lewis”), have both recommended shareholders vote FOR the proposed acquisition of WestJet by Onex Corporation (“Onex”) at the upcoming special meeting (the “Meeting”) of shareholders and optionholders (collectively, “Securityholders”) of WestJet being held on July 23, 2019 at 10:00 a.m. (Mountain Time) at the WestJet Campus, Fred Ring building, 22 Aerial Place N.E., Calgary, Alberta.

At the Meeting, Securityholders will be asked to vote on a special resolution (the “Arrangement Resolution”) approving an arrangement (the “Arrangement”) under Section 193 of the Business Corporations Act (Alberta) involving WestJet, Kestrel Bidco Inc. (the “Purchaser”), 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 (the “Arrangement Agreement”), 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: “[W]e 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.”

Some Key Reasons for the Arrangement

The independent special committee (the “Special Committee”) of the board of directors of WestJet (the “Board”) 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.

Arrangement More Favourable than Status Quo. 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.

Better Acquisition Terms Highly Unlikely. 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.

Significant Premium to Market Price. 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.

Certainty of Value and Liquidity. 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.

Continued Payment of Regular Quarterly Dividends. 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.

A copy of the management information circular of the Company dated June 19, 2019 (the “Circular”) and related Meeting materials have been mailed to Securityholder and can also be obtained via SEDAR at www.sedar.com, on WestJet’s website at www.westjet.com or by contacting Laurel Hill Advisory Group toll-free at 1-877-452-7184 or at 416-304-0211 or by email at assistance@laurelhill.com.

The Board of Directors unanimously recommends that Securityholders vote FOR the Arrangement Resolution and encourages all Securityholders to vote well in advance of the proxy cut-off on July 19, 2019 at 10:00 a.m. (Mountain Time).

About WestJet
Together with WestJet’s regional airline, WestJet Encore, we offer scheduled service to more than 100 destinations in North America, Central America, the Caribbean and Europe and to more than 175 destinations in over 20 countries through our airline partnerships. WestJet Vacations offers affordable, flexible vacations to more than 60 destinations and the choice of more than 800 hotels, resorts, condos and villas. Members of the WestJet Rewards program earn WestJet dollars on flights, vacation packages and more. Members use WestJet dollars towards the purchase of flights and vacations packages to any WestJet destination with no blackout periods and have access to Member Exclusive fares offering deals to WestJet destinations throughout our network and those of our partner airlines.

WestJet is proud to be recognized for three consecutive years as Best Airline in Canada (2017-19) and awarded among travellers’ favourite Mid-Sized Airlines in North America (2019). From 2017-2018, WestJet was also awarded among travellers’ favorite Mid-Sized and Low-Cost Airlines in North America. The airline was also recognized among the Economy Class winners in North America, 2018. All awards are based on authentic reviews from the travelling public on TripAdvisor, the world’s largest travel site. We are one of very few airlines globally that does not commercially overbook.

WestJet is publicly traded on the Toronto Stock Exchange (TSX) under the symbol WJA. For more information about everything WestJet, please visit westjet.com.

Recent recognition includes:
2019/2018/2017 Best Airline in Canada (TripAdvisor Travellers’ Choice awards for Airlines)
2019 Winner Among Mid-Sized Airlines in North America (TripAdvisor Travellers’ Choice awards for Airlines)
2018/2017 Winner Among Mid-Sized and Low Cost Airlines – North America (TripAdvisor Travellers’ Choice awards for Airlines)
2018 Winner – Economy, North America (TripAdvisor Travellers’ Choice awards for Airlines)
2018 Number-One-Ranked Airline Credit Card in Canada (Rewards Canada)
2018 North America’s Best Low-Cost Airline (Skytrax)
2018/2017/2016 Canada’s Most Trusted Airline (Gustavson School of Business at the University of Victoria)

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For further information: WestJet Investor Relations: 1-877-493-7853, Email: investor_relations@westjet.com; WestJet Media Relations: 1-888-WJ-4-NEWS (1-888-954-6397), Email: media@westjet.com, Website: www.westjet.com