Air Canada may become the proud new owner of Air Transat.

According to a statement by Air Transat Inc, it has entered a 30 day exclusive negotiation period following a letter of intent from Air Canada.

Air Canada has proposed to value Air Transat at $13 per share or roughly $520 million, providing a 22 percent premium from the company’s current market price.

“This announcement is good news for Transat”, said Jean-Marc Eustache, President and Chief Executive Officer of Transat. “This is an opportunity to team up with a great company that knows and understands our industry and has had undisputable success in the travel business. This represents the best prospect for not only maintaining, but growing over the long term the business and jobs that Transat has been developing in Quebec and elsewhere for more than 30 years.”

Potential for stifled competition?

According to the company’s own filings, Air Transat controls 22 percent of sun travel in Canada(places such as Mexico and the Caribbean), as well as 20 percent of the Canada to Europe market.

The company also employs 5000 employs.

Given Air Canada’s dominant position in the Canadian air travel market, this acquisition could bring up problems with Canada’s Competition Bureau.

For now though we will have to wait until the end of the 30-day negotiation