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Amazon Acquiring Nearly 20% of Cargo Carrier Air Transport Services Group

By Eric Volkman - Updated Mar 8, 2021 at 5:31PM

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The company is clearly aiming to be the master of its own destiny in logistics.

Bolstering its ever-important logistics efforts, Amazon (AMZN 0.25%) has exercised options to acquire a pack of shares in air cargo operator Air Transport Services Group (ATSG -1.46%).

The giant retailer pulled the trigger on over 14.4 million shares of Air Transport Services' common stock by exercising several warrants. For nearly 13.6 million of those shares, it is paying nearly $132 million. The remainder are being acquired on a cashless basis per the terms of the warrants.

A silhouetted airplane taking off at either dawn or dusk.

Image source: Getty Images.

Those purchases will give Amazon almost 20% of Air Transport Services. And that might only be the start. According to the latter company, Amazon still holds warrants sufficient to give it a shareholding of under 40%.

The partnership between the two companies dates back to 2016 when Air Transport Services started operating airplanes for Amazon's air cargo unit. 

Since logistics is a foundational aspect of its business, Amazon continues to be laser-focused on it. At the beginning of this year, the company bought its first aircraft -- 11 Boeing 767-300 jets. Previously, the company had only leased planes. Building out a robust logistics effort, both in the air and on the ground, reduces Amazon's dependence on third-party partners.

So far, Amazon has not commented on the exercise of its Air Transport Services warrants. The purchases are subject to approval by the U.S. Department of Transportation. With a less than 20% stake, it's unlikely the company will be blocked.

Despite what should be considered a positive development for Amazon, the company's stock fell by 1.6% on Monday, a steeper fall than the S&P 500 index's 0.5% dip. Not surprisingly, Air Transport Services did well, rising by 5.5%.

 

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Stocks Mentioned

Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$2,151.82 (0.25%) $5.44
The Boeing Company Stock Quote
The Boeing Company
BA
$120.70 (-5.07%) $-6.44
Air Transport Services Group, Inc. Stock Quote
Air Transport Services Group, Inc.
ATSG
$28.99 (-1.46%) $0.43

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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