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Amazon Buys Stake in Air Cargo Carrier for $132 Million

Amazon exercises warrants to acquire 19.5% stake in Air Transport Services Group
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  • Publish date:  (AMZN) - Get, Inc. Report exercised warrants to acquire 13.6 million shares of Air Transport Services Group  (ATSG) - Get Air Transport Services Group, Inc. Report for $9.73 a share, or $132 million, according to an SEC filing Monday.

In addition, Amazon exercised warrants in a cashless transaction that netted the company an additional 866,000 shares of ATSG.

The transactions were completed Friday, according to the Air Transport Services Group filing with the Securities and Exchange Commission.

The move, which must still be approved by the Department of Transportation, will give Amazon 19.5% of the air cargo operator and the right to appoint one member of its board, Bloomberg reported. 

 In recent years, Amazon has sought to increase control of all aspects of its delivery services, including through leasing agreements with ATSG and other air freight operators. 

Amazon's cargo air fleet was launched in 2016. Last June, Amazon leased 12 aircraft to take its overall fleet of leased planes to more than 80.

ATSG operates 33 aircraft on behalf of Amazon Air, a number that could rise to 46 by the end of the year, Bloomberg said.

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Earlier this year Amazon announced plans to buy 11 Boeing 767 aircraft. It also is completing work on its own air-cargo hub at Cincinnati/Northern Kentucky International Airport, Bloomberg reported.

Shares of FedEx Corp.  (FDX) - Get FedEx Corporation Report fell 2.3% Monday. United Parcel Service  (UPS) - Get United Parcel Service, Inc. Class B Report shares fell 2.2%.

Overall, stocks finished mixed Monday, with the Dow Jones Industrial Average setting an intraday record. But tech stocks declined as investors rotated out of the sector amid an increase in Treasury bond yields. The Dow Jones Industrial Average finished up 306 points, or 0.97%, to 31,802, the S&P 500 lost 0.54% and the Nasdaq fell 2.41%. 

Amazon holds additional warrants that could give it control of nearly 40% of ATSG if exercised, subject to expanded leasing agreements.

Amazon shares fell 1.6% in the regular session to $2,951.95. They edged higher in after-hours trading.

Amazon is a part of Jim Cramer’s Action Alerts PLUS investing club.