(Reuters) - Canada's largest airline Air Canada has raised the value of its offer to buy Canadian tour operator Transat AT Inc to about C$720 million ($544.75 million), or C$18 per share, from its earlier offer of C$13 a share, the companies said in a joint statement.
Letko Brosseau, Transat's largest shareholder with about 19.3% of the company's shares, supports the Air Canada acquisition, according to the statement, which added that Air Canada has entered into a lockup and support agreement with the shareholder.
Transat's board has recommended that its shareholders approve the deal with Air Canada, which is expected to be completed early next year, the companies said.
Transat is required to pay C$40 million if it backs out of the agreement, an increase from the earlier breakup fee of C$15 million, the statement added.
Earlier this month, Montreal real estate developer Mach offered to buy at least 6.9 million, or about 19.5%, class B voting shares of Transat at C$14 per share, as it looked to block Air Canada's deal.
Transat in June accepted Air Canada's earlier all-cash bid of C$13 a share, over a C$14 per share offer from Group Mach.
($1 = 1.3217 Canadian dollars)
(Reporting by Kanishka Singh in Bengaluru; Editing by Bill Rigby)