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DOT approves private equity buy of Atlas Air, company says

Publicly traded cargo airline Atlas Air said Tuesday the Department of Transportation has signed off on its sale to private investors and that it expects to finalize the deal Friday.

A private equity consortium led by Apollo Global Management (NYSE: APO) agreed in early August to buy Atlas Air Worldwide Holdings (NASDAQ: AAWW) for $5.2 billion, including $2.2 billion in debt. Apollo’s partners are J.F. Lehman & Co. and Hill City Capital. Analysts expected the sale would be finalized early this year.

“As of March 14, 2023, all regulatory conditions to closing set forth in the merger agreement were satisfied. Subject to the satisfaction or waiver of the remaining closing conditions, the company expects to consummate the merger on or about March 17,” Atlas said in a Securities and Exchange Commission filing. 

The world’s largest operator of Boeing 747 freighters said in its fourth-quarter earnings last month that it has received all shareholder and regulatory approvals save from the DOT. Atlas Air, which also offers passenger charters, has a diverse customer base that includes Amazon, DHL Express, Alibaba’s logistics arm Cainiao, and the U.S. Department of Defense.

Once the sale is consummated Atlas will be removed from the Nasdaq exchange and no longer be required to report its financial performance.

The airline’s stock increased 3.1% to $102.40 in aftermarket trading.

Speculation had increased in recent weeks that the DOT was taking a long time to approve the sale because of the Biden administration’s pro-consumer competition agenda and concerns over corporate consolidation. Transportation Secretary Pete Buttigieg said in a Bloomberg interview that the department is concerned about concentration in the airline, ocean and freight railroad industries and recently hired a legal expert from the Federal Trade Commission to lead its merger reviews. 

The Department of Justice last week filed suit to block JetBlue’s $3.8 billion takeover of Spirit Airlines on grounds it would drive up airfares and reduce choice.  And the DOT rejected JetBlue’s exemption request seeking to operate under single ownership while the undergoes regulatory review.

But the Atlas Air deal is different because it is a sale to private investors more than a merger of two rival cargo airlines.

However, on Thursday the Department of Justice said two Apollo Global-affiliated directors left the Sun Country Airlines (NASDAQ: SNCY) board due to antitrust concerns about interlocking directors associated with the Atlas Air acquisition. Sun Country is a passenger carrier to leisure destinations but also operates a dozen small cargo aircraft for Amazon Air (NASDAQ: AMZN).

The move came after U.S. Assistant Attorney General Jonathan Kanter last May said he would scrutinize private equity firms acquiring companies. Investor groups sometimes act in anti-competitive fashion, Kanter told the Financial Times.

Since October, directors resigned from the boards of nine companies in response to DOJ concerns about potential illegal interlocking company directors, 

Atlas Air recorded $287 million in fourth-quarter adjusted earnings before accounting measures, a 23.6% decline from the prior year, reflecting weak shipping demand that resulted in fewer flying hours and higher operating costs associated with weather disruptions.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.


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