Air Canada has entered into an exclusive negotiation agreement to acquire leisure-focused airline Transat.

The proposed deal currently on the table would have Air Canada acquire Transat at a price of $13 per share, or $520 million.

The negotiation agreement does not guarantee an acquisition deal. Rather, it means Transat will only negotiate with Air Canada for such a deal for the next 30 days, after which it would be free to entertain other offers. If Transat were to walk away for another deal, it would be subject to a $15 million fee to Air Canada. Transat said in its release that it had fielded offers from “several parties,” with its board deciding to pursue exclusive negotiations with Air Canada “with a view towards completing the transaction.”

Once a deal is reached, it would still be subject to regulatory and shareholder approvals before closing.

According to Transat’s filings, it operates roughly 20% of flights between Canada and Europe, with Air Canada operating roughly 41%. Air Transat operates roughly 22% of flights between Canada and tropical destinations such as Mexico and the Caribbean, with Air Canada operating 24% (while Transat is better-known for its “sunny” destinations, vacations to Europe have been a focal point of its marketing in recent years).

Calin Rovinescu, president and CEO of Air Canada, said in a statement that the acquisition would help the company become a leader in the leisure travel market, as well as grow its hub at Montreal-Trudeau Airport. In its annual information filing for 2018, Air Canada stated it was pursing a strategy to improve profitability and competitiveness in leisure travel markets, both through vacation packages offered through its Air Canada Vacations division and by offering more affordable options through its low-cost carrier Air Canada Rouge, which has been growing its service to destinations in the Caribbean and other markets where it has seen demand.

In a separate statement, Jean-Marc Eustache, president and CEO of Transat, said working with Air Canada represented “the best prospect” for maintaining and growing its business and the number of jobs it can offer (particularly in Quebec) over the long term.

The news of the potential acquisition comes days after it was announced that WestJet, Air Canada’s largest competitor in the Canadian market, is set to be acquired by private equity firm Onex.