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Amazon ready to buy 9.99pc of air cargo partner ATSG for US$69 million
ONLINE retail giant Amazon.com is poised to purchase a 9.99 per cent stake in aircraft leasing company Air Transport Services Group (ATSG) in a move to build its own in-house shipping and logistics service.
Two weeks ago, ATSG - the company that handles its emerging air freight operation out of Ohio - agreed to run an ambitious air freight service operation for Amazon out of ATSG's Wilmington, Ohio, hub, according to the Seattle Times.
The agreement, which followed months of secret testing with a few planes, includes the leasing of 20 Boeing 767 freighter jets by ATSG to Amazon.
As part of the deal, ATSG gave Amazon the right to acquire up to 19.99 per cent of its outstanding common shares over the next five years.
A filing with the Securities and Exchange Commission on March 18 indicated the issuance of warrants for 7.1 million shares, or 9.99 per cent of the company, to Amazon, according to ATSG. Under the rules of the contract between the companies, Amazon can acquire those shares at the earliest of either July 8, or ATSG's next stockholder meeting.
The rules of the agreement give Amazon one seat on ATSG's board once the company obtains at least 10 per cent of the shares.
Amazon also will be able to buy 5.12 million more shares upon ATSG's reaching certain milestones, and additional investments are scheduled over time. At the agreed-upon price of US$9.73 per share, a 9.99 per cent stake represents a $69 million investment - that was worth $103 million at Friday market prices.
Two weeks ago, ATSG - the company that handles its emerging air freight operation out of Ohio - agreed to run an ambitious air freight service operation for Amazon out of ATSG's Wilmington, Ohio, hub, according to the Seattle Times.
The agreement, which followed months of secret testing with a few planes, includes the leasing of 20 Boeing 767 freighter jets by ATSG to Amazon.
As part of the deal, ATSG gave Amazon the right to acquire up to 19.99 per cent of its outstanding common shares over the next five years.
A filing with the Securities and Exchange Commission on March 18 indicated the issuance of warrants for 7.1 million shares, or 9.99 per cent of the company, to Amazon, according to ATSG. Under the rules of the contract between the companies, Amazon can acquire those shares at the earliest of either July 8, or ATSG's next stockholder meeting.
The rules of the agreement give Amazon one seat on ATSG's board once the company obtains at least 10 per cent of the shares.
Amazon also will be able to buy 5.12 million more shares upon ATSG's reaching certain milestones, and additional investments are scheduled over time. At the agreed-upon price of US$9.73 per share, a 9.99 per cent stake represents a $69 million investment - that was worth $103 million at Friday market prices.
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