Air Canada has increased its total offer by C$200m ($151.1m) to acquire Air Transit’s parent company Transat, bringing the total value to C$720m ($544.1m).

In May, Air Canada reached an exclusive agreement to acquire all issued and outstanding shares of Transat for C$520m ($386.93m).

The airline has agreed to increase the purchase price for the acquisition from $13 to $18 a share, as well as amended the arrangement agreement signed in June.

Air Canada also signed a lock-up and support agreement with Transat’s largest shareholder, Letko Brosseau and Associates, which owns 19.3% of all issued and outstanding shares of Transat.

Under the agreement, Letko Brosseau has agreed to support and vote all of the Class B voting shares of Transat it controls, in favour of the acquisition.

The investor earlier said it would not support Air Canada’s deal if the purchase price remained at $13 a share.

Air Canada president and CEO Calin Rovinescu said: “For shareholders of Transat and Air Canada, the 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 latest move comes as Transat has been facing off against the real estate developer Mach at a securities tribunal hearing over the latter’s move to block Air Canada’s acquisition.

Mach offered to buy at least 6.9 million class B voting shares of Transat earlier this month, as it looked to block the deal.

Transat’s board has now recommended that its shareholders approve the Air Canada deal.

The deal is subject to approvals from regulators, including Transport Canada and the Competition Bureau, and expected to close early next year.