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EXCERPTS
Air Canada, CAI & ONEX - The Takeover Drama
Air Canada offered to buy CAI's international business in August 1999. In the same month, Onex Corp. (Onex), along with its strategic partner American Airlines, offered to buy both Air Canada and CAI for US$1.8 billion and then merge the two airlines.
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Air Canada offered to buy CAI's international business in August 1999. In the same month, Onex Corp. (Onex), along with its strategic partner American Airlines, offered to buy both Air Canada and CAI for US$1.8 billion and then merge the two airlines. Air Canada also accused Onex of attempting a hostile takeover. Following this, Air Canada increased the number of its outstanding shares through a shareholders rights plan, effectively doubling the price of any takeover offer. Air Canada also scheduled a special shareholders meeting to discuss Onex's offer on January 7, 2000. Onex considered Air Canada's actions 'disrespectful and arrogant' and took legal action against it, demanding that the meeting be rescheduled to an earlier date...
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Merger Traumas
In the months following the merger with CAI, Air Canada
faced a host of problems on the employee, customer and strategic fronts.
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The merger resulted in the addition of 16,000
employees of CAI
to Air Canada's employee base. Of its 40,000 employee base, around 10,000
were surplus (on account of duplicate positions). However, the company
could not lay off the excess workforce due to the terms of the merger
agreement.
All along, trade unions of both the companies had expressed their
displeasure over the deal, fearing lay-offs and wage cuts. Analysts too
felt that as the two airlines had been bitter competitors for many
decades, it would prove to be very difficult for the respective
workforces to establish harmonious working relationships... |
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