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Amazon Takes 10% Stake in Air Transport Services Group

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Online retail giant Amazon.com, Inc.AMZN has bought a 9.99% stake in the aircraft leasing company Air Transport Services Group, Inc. ATSG . This deal is another step on Amazon's part toward building its own in-house shipping and logistics service.

In a 13G filling with the Securities & Exchange Commission submitted on Friday, Air Transport Services declared that Amazon had been granted a warrant on Mar 8, which it could exercise to acquire 7.1 million of its shares or 9.99% of stock. The warrant was to be exercised upon the earlier of Jul 8 or ATSGs next shareholder meeting.

The deal also granted Amazon the right to buy up to 19% of ATSG's common stock over the next five-year period. The shares are to be bought at $9.73 per share based on the closing price on Feb 9, 2016.

Amazon has recently taken initiatives to strengthen its global logistics service and delivery systems. Last week, Amazon disclosed its deal with ATSG, under which it will be leasing 20 Boeing 767 widebody freighter aircraft.

In Jan 2015, Amazon China obtained an ocean-shipping license from the U. S. Federal Maritime Commission and registered itself as an ocean freight forwarder. According to Amazon CFO Brian Olsavsky, the company applied for the shipping license to add to its shipping options and not replace existing systems.

So it appears that while Amazon may not immediately do away with traditional shippers like FedEx Corp. FDX and United Parcel Service, Inc. UPS , it is certainly going to build alternatives/supplements by developing its own global logistics.

At present, Amazon is a Zacks Rank #3 (Hold) stock.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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