Air cargo shipping: ABX completes Cargo Holdings International acquisition

Jeff Berman, Senior Editor -- Logistics Management, 1/2/2008

ABX Holdings Inc. said this week that its subsidiary ABX Air Inc. has officially completed its acquisition of Cargo Holdings International Inc.

In November, ABX first announced it planned to acquire CHI by the end of 2007 for approximately $350 million. But according to a company statement issued earlier this week, the final sale price was $259 million, comprised of $233 million in cash and four million shares of ABX Holdings common stock. ABX Holdings is a new holding structure that was created by ABX before the deal was closed, which enables ABX Air to become a subsidiary of ABX Holdings Inc.

CHI is an Orlando, Florida-based provider of outsourced air cargo services and air cargo transportation and related services to domestic and foreign air carriers and other companies that outsource their air cargo lift requirements to reliable, cost-effective independent operators. It also provides aircraft leasing, fuel management, specialized transportation management, and air charter brokerage services.

ABX and CHI cumulatively have a fleet comprised of more than 135 aircraft and will operate the largest fleet of 767’s in the world, according to ABX. It added that most of these aircraft will operate under contracts to provide airlift for DHL and BAX/Schenker in the United States and other global customers, too.

“By acquiring CHI, we will broaden and strengthen our service platform by diversifying our customer base and expanding our service offerings,” said ABX President and CEO Joe Hete in a November conference call. “Both companies have a core relationship with one large global client. In CHI’s case, it is BAX/Schenker, and ours it is DHL. Both have also cultivated strong relationships with other airlines, forwarders, and shippers. These customers—and others—provide us with a broad platform for growth, as it enables us to offer the diverse services of both companies with a larger combined customer base.”

And Hete added that gaining access to a large, complimentary fleet in a time of a limited supply of cargo aircraft is a major strategic benefit of this transaction. He added that ABX’ acquisition and purchase of Boeing 767-200 freighters over the past two years— coupled with the models it had previously purchased from the DHL network—make ABX the leading provider of medium-wide cargo body lift. When the five 767s CHI has purchased are converted, he said he expects the companies to have a combined total of 48 767s, including 19 available outside of its DHL and CHI agreements.