DEFA14A: Air Transport Services Group to be Acquired by Stonepeak for $3.1 Billion

Air Transport Services Group (ATSG) has agreed to be acquired by Stonepeak in an all-cash transaction valuing the company at approximately $3.1 billion, with shareholders receiving $22.50 per share.

Summary

• Air Transport Services Group, Inc. (ATSG) has entered into a definitive agreement to be acquired by Stonepeak for $22.50 per share in cash, valuing the company at approximately $3.1 billion.
• The purchase price represents a 29.3% premium over ATSG's closing share price on November 1, 2024, and a 45.5% premium over the 90-day volume-weighted average price.
• Upon completion, ATSG will become a private company and its shares will be delisted from NASDAQ.
• The transaction is expected to close in the first half of 2025, pending shareholder and regulatory approvals.
• Stonepeak has secured fully committed equity and debt financing for the transaction, which is not subject to a financing condition.
• ATSG has a go-shop period until December 8, 2024, and potentially until December 23, 2024, to solicit alternative proposals.
• The agreement includes a termination fee of $55,339,993, which may be reduced to $37,156,852 under certain circumstances.
• If the deal is terminated due to Parent breaching the agreement or failing to secure financing, ATSG will receive a termination fee of $150,000,000.
• The company's bylaws were amended to include a forum selection clause, designating Delaware courts for legal actions.
• ATSG has cancelled its Q3 2024 earnings call due to the pending acquisition.

Sentiment

Score: 8

Explanation: The sentiment is positive due to the substantial premium offered to shareholders and the expectation of future growth under Stonepeak's ownership. The deal provides certainty for investors and reflects confidence in ATSG's business model.

Positives

• Shareholders will receive immediate and certain cash value at a substantial premium.
• Stonepeak's investment and expertise are expected to help ATSG expand its global presence and enhance its service offerings.
• The transaction is not subject to a financing condition, increasing the likelihood of completion.
• The go-shop period provides an opportunity to potentially secure a better offer.
• The company will receive a $150,000,000 termination fee if Parent terminates the agreement or fails to secure financing.

Negatives

• ATSG will become a private company, and its shares will no longer trade on NASDAQ.
• The transaction is subject to customary closing conditions, including shareholder and regulatory approvals, which could delay or prevent completion.
• The company has cancelled its Q3 2024 earnings call due to the pending acquisition.

Risks

• The transaction may not close if shareholder or regulatory approvals are not obtained.
• The occurrence of any event, change, or other circumstances that could give rise to the termination of the definitive agreement.
• Potential litigation relating to the transaction could be instituted against the Company or its directors and/or officers.
• The risk associated with third party contracts containing material consent, anti-assignment, transfer or other provisions that may be related to the Transaction which are not waived or otherwise satisfactorily resolved.

Future Outlook

ATSG anticipates expanding its global presence in the air cargo leasing market and enhancing its service offerings with Stonepeak's investment and expertise.

Management Comments

• Joe Hete, Executive Chairman of ATSGs Board of Directors, said, 'The agreement with Stonepeak will deliver immediate and certain cash value to ATSGs shareholders at a substantial premium to recent market prices.'
• Mike Berger, Chief Executive Officer of ATSG, said, 'In Stonepeak, we have found a partner that recognizes the power of our Lease+Plus strategy to provide comprehensive aircraft leasing and operating solutions to our customers.'

Industry Context

The acquisition reflects the increasing demand for midsize freighter aircraft and the growing importance of e-commerce in the global economy.

Comparison to Industry Standards

• The premium offered to ATSG shareholders is within the typical range observed in similar M&A transactions in the transportation and logistics sector.
• Comparable companies in the aircraft leasing industry, such as Air Lease Corporation and AerCap Holdings, have also seen significant investor interest due to the strong demand for aircraft.

Corporate Governance

Stakeholder Impact

• Shareholders will receive a premium for their shares.
• Employees are expected to benefit from Stonepeak's investment and expertise.
• Customers can anticipate enhanced service offerings.
• The acquisition is expected to benefit communities and other stakeholders.

Next Steps

• Obtain approval from ATSG's shareholders.
• Secure necessary regulatory approvals.
• Complete the transaction, expected in the first half of 2025.

Key Dates

Keywords

acquisition, stonepeak, atsg, merger, freighter, leasing, aviation, financing, shareholders, takeover