(Reuters) - Canada’s Groupe Aeroplan AER.TO, which operates Air Canada’s ACa.TO frequent flyer program, said it will buy a minority position in AeroMexico’s frequent flyer program, Club Premier, to expand into the Latin American market.
Groupe Aeroplan said it will initially invest $22 million in Club Premier, with an additional $12 million to be invested if certain performance milestones are achieved within 18 months of closing.
“We may consider the potential merits of a future IPO of Club Premier, at an opportune time, if and when conditions are favorable,” Groupe Aeroplan CFO David Adams said in a statement.
The deal, which will be financed with cash on hand, is expected to close in the third quarter of 2010, Groupe Aeroplan said.
AeroMexico is the domestic airline in Mexico, whose shareholders include Mexican bank Banamex, the company said.
Shares of Groupe Aeroplan were up 6 Canadian cents at C$10.43 in Monday morning trade on the Toronto Stock Exchange.
Reporting by Gowri Jayakumar in Bangalore; Editing by Anne Pallivathuckal