Morningstar | WestJet Glides Into Private Markets in CAD 5 Billion Transaction With Onex Corporation; Raising FVE
We’re raising our fair value estimate to CAD 31 from CAD 19.70 for no-moat WestJet after it agreed to an all cash acquisition by Onex Corporation and its affiliated funds. The CAD 31 purchase price puts WestJet’s enterprise value at about $5 billion. We think this a great deal for shareholders considering it values shares at a 60% premium to our existing CAD 19.70 fair value estimate and 67% premium to WestJet’s May 10 close. WestJet’s Onex implies a valuation near 8 times 2018 EBITDA (excluding rent).We expect the deal to close in the back-half of 2019 or early 2020 following approval from the Minister of Transport’s review. We think private markets are a great landing spot for WestJet’s assets, since public markets are uneasy about commodity volatility, a stalling upcycle, and management’s operational transformation. The private market is able to weather these near-term headwinds and give WestJet space to execute on a myriad of initiatives geared toward attracting premium travelers and fleet optimization.
WestJet Airlines is a Canadian airline. Co. provides scheduled and charter commercial air travel, vacation packages and cargo services across North America, Central America, the Caribbean and Europe. Co.'s commercial air travel business also supports a variety of other product and service offerings including: flight change and cancel options; upgrading to its Plus seating; baggage fees; food, beverage and inflight entertainment options; and its WestJet RBC MasterCard. Co.'s vacation package provides a variety of products and services purchased through packages such as: flights, hotel accommodations, car rentals and tour attractions.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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