Air Canada has concluded a definitive arrangement agreement to acquire all issued and outstanding shares of Transat for C$520m ($387m).

Under the agreement, Air Canada will acquire all outstanding shares of Transat for $13 a share.

Air Canada president and CEO Calin Rovinescu said: “For shareholders of Transat and Air Canada, this combination delivers excellent value while also providing increased job security for both companies’ employees through greater growth prospects.

“Air Canada intends to preserve the Transat and Air Transat brands and maintain the Transat head office and its key functions in Montreal. The Quebec economy will derive maximum advantage of having a Montreal-based, growth-oriented global champion in aviation, the world’s most international business.”

In May, Air Canada signed an initial exclusive agreement to acquire all issued and outstanding shares of Transat.

Transat is the parent company of Canadian leisure airline Air Transat, which serves 60 destinations in 25 countries.

Transat president and CEO Jean-Marc Eustache said: “The combination with Air Canada will give Transat new perspectives of growth, with the support of a strong network offering many options for connecting traffic.

“This fully funded cash transaction is the ideal platform for Transat’s presence and jobs in Montreal, and therefore represents the best option for all our stakeholders: employees, suppliers, partners and shareholders.”

Transat agreed to the exclusive negotiations after a recommendation from a special committee of independent directors, which was responsible for examining any proposals for the acquisition.

Expected to be closed early next year, the transaction is subject to regulatory and shareholder approvals, as well as other customary closing conditions.