MONTREAL, Aug. 31 -- Air Canada has announced a plan to fight what it considers a hostile takeover bid by the Toronto-based Onex Corp. The airlines said today its board of directors have approved a rights plan that will allow the company more time 'to develop value-enhancing alternatives for shareholders to the unsolicited proposal announced recently by Onex Corp. and American Airlines.' The statement came one week after Onex Corp. President Gerald Schwartz offered to buy Air Canada and merge it with Canadian Airlines, which is on the brink of collapse. Schwartz said Onex would hold 31 percent of the new merged airline company, with American Airlines holding 14.9 percent, and the remaining 54.1 percent being held by public shareholders. Air Canada's President and Chief Executive Officer Robert Milton says the rights plan would 'ensure Air Canada's shareholders have a reasonable amount of time to consider any valid proposals that might come forward, including any that Onex and American Airlines may put forward.' Under the rights plan, if a person or group acquires more than 10 percent of the company's common shares in transactions not approved by the board of directors, the other shareholders will be entitled to acquire additional shares. Industry analysts say the so-called 'poison pill' plan would give the company the right to issue more shares at reduced prices, making it more expensive for Onex and American Airlines to buy Air Canada. Air Canada says it has also scheduled a special meeting of its shareholders for Jan. 7 'to consider valid proposals,' including that of Onex and American Airlines.
That date is about two months after the Onex offer expires. On Aug. 13, federal Transport Minister David Collenette said Ottawa was giving Air Canada and Canadian Airlines 90 days to discuss reconstruction of routes and ticket prices without running afoul of the Competition Act. Onex says it will fight Air Canada's latest move, accusing it of setting its special shareholders meeting outside the 90-day deadline. ---
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