Infrastructure investor Stonepeak Capital has agreed to acquire Air Transport Services Group in a take-private transaction valued at $3.1 billion, reflecting the rising demand for travel and ecommerce logistics.
The deal will enhance ATSG’s reach in air cargo leasing and help it better serve its government clients, including the US Department of Defense.
With travel activity rebounding and ecommerce continuing to drive supply chain needs, PE firms are increasingly active in the aerospace sector. Passenger volumes are expected to return to pre-pandemic 2019 levels by the year’s end.
In May, Nasdaq-listed ATSG expanded its longstanding partnership with ecommerce giant Amazon, adding 10 Boeing 767 freighters to its fleet under a contract that now extends operations to 2029, reinforcing an eight-year collaboration.
“It makes sense that a company that provides freight services to Amazon and other customers would be an attractive target, due to the rapid growth of online logistics which is only likely to continue,” said PitchBook senior industrials analyst Jim Corridore.
That said, the firm is not without challenges.
“ATSG has been impacted by higher interest rates and lower leasing activity—some of these things are fundamental to the industry—but it is clear that there are some things Stonepeak can do to lower costs and improve lease penetration rates,” he said. “At the same time, if the Fed cuts interest rates over the next year, that should help lower the company’s costs over time, too.”
ATSG reported consolidated Q2 earnings from continuing operations at $7.4 million for that quarter, against $38 million for Q2 2023.
ATSG shareholders will receive $22.50 per share in cash—a 29.3% premium over the closing share price on Nov. 1.
Other PE players are similarly investing in aerospace. In October, Apollo Global Management acquired Barnes Group, an aerospace manufacturer, in a $3.6 billion take-private deal.
Initially founded as ABX Air in 1980, ATSG specializes in aircraft leasing, maintenance, and freight transportation for corporate clients, as well as passenger transportation.
Goldman Sachs served as financial advisor to ATSG, while Davis Polk & Wardwell and Vorys, Sater, Seymour & Pease provided legal counsel.
Stonepeak was advised by Evercore, with legal counsel from Simpson Thacher & Bartlett and Hogan Lovells.
Madeline Shi contributed to this report.
Featured image by Supakit Sawaengnil/Getty Images
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