An investor group led by Apollo Global Management Inc. is acquiring Atlas Air Worldwide Holdings Inc. for about $3.2 billion, expanding its foray into aircraft leasing and charter flying as the need for air cargo cools from pandemic-era highs.
The consortium agreed to pay $102.50 a share in cash or about 57% more than the stock’s 30-day average price, the companies told in a report, which confirmed earlier Bloomberg News reporting. A spokesman for Atlas placed the equity value of the transaction at about $3.2 billion, while the deal’s enterprise value including debt is about $5.2 billion.
New York-based Atlas has a fleet of 108 aircraft
The investment in Atlas, the world’s largest operator of Boeing Co. 747 jets, rounds out Apollo’s portfolio of aviation holdings. Purchase, New York-based Atlas has a fleet of 108 aircraft, about half of which are hump-backed jumbos, distinctive for noses that flip open to front-load bulky freight. Atlas also transports troops for the US military and trains flight crews for the Air Force One fleet.
The agreement is expected to close as soon as the fourth quarter and is subject to approval from Atlas shareholders and US regulators. Once it becomes a privately held company, Atlas will restart to operate under the same brand and be led by current Chief Executive Officer John Dietrich. Other members of the Apollo-led group include affiliates of J.F. Lehman & Co. and Hill City Capital.
- Atlas rose 2.9% at 3:34 p.m. in New York. The company’s shares had surged this week in anticipation of a possible agreement, closing Wednesday at $96.78.
International Air Transport Association
International demand for air freight dipped 4.2% during the first half of 2022 from a year earlier but was still 2.2% higher than pre-Covid shipping levels during the same stretch of 2019, according to the International Air Transport Association, an airline trade group. The sector has drawn a torrent of funding from investors looking to profit from logistics and shipping disruptions stemming from the pandemic and Russia’s invasion of Ukraine.
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The deep-pocketed backers could help Atlas find replacements for its long-in-tooth Boeing 747-400 freighters, according to Helane Becker, an analyst with Cowen.
“At some moment, Atlas will require to replace those aircraft with younger, more fuel-efficient aircraft, and as interest rates rise, having Apollo’s cash flow and financing ability, coupled with its cash flows, would enable it to finance aircraft at competitive rates,” she wrote in a report Thursday.
Apollo also holds stakes in Swissport, which provides airport services like fueling and baggage loading; Merx Aviation, which leases aircraft; and Sun Country Airlines. In addition to flying passengers, the hybrid low-cost carrier rents luxurious jets to professional and college sports teams. Both Atlas and Sun Country provide cargo jets to Amazon.com Inc.’s freight-hauling airline.
When the merger takes effect, all outstanding shares granted to Amazon under the terms of a 2016 warrant will automatically vest and be exercised, Atlas told in a regulatory filing Thursday. On an undiluted basis, the transaction has an equity value of $2.9 billion, based on data compiled by Bloomberg.
Morgan Stanley advised Atlas Air Worldwide, while Evercore, Barclays, Goldman Sachs, and Mizuho advised the investor consortium.
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