DHL to pay $150 million for 49% of Polar Air...brrrrrrrrr!

DHL and Atlas Air Worldwide Holdings Inc. have signed an agreement that will give the German express package delivery and logistics giant a 49 percent shareholding in Polar Air Cargo as well as increased air freight capacity in the transpacific market for the next 20 years.

Under terms of the agreement, DHL will pay $150 million, in staggered cash payments ending November 2008, for the 49 percent equity stake in Polar, including a 25 percent voting interest. In addition, DHL will enter into a 20-year block space agreement with Polar to obtain guaranteed capacity on routes to major Asian destinations.

Polar will continue to operate as an independent company with no integration with DHL or any of its units.

"This key strategic partnership ensures we can meet the rapidly rising demand for air cargo capacities between the U.S. and Asian destinations," said John Mullen, chief executive officer of DHL's express division.

"The transpacific route is one of the most rapidly growing and competitive trade lanes globally and adding capacity through an even stronger presence in the U.S. is a crucial factor in supporting our dynamic Asian business. Polar is the ideal partner to achieve that. Our long-term partnership will benefit both companies and enhance competition in the express delivery sector of the air cargo market," Mullen said.

"Our strategy has been to maximize the value and potential of our scheduled-service business, and this transaction accomplishes that goal," said William J. Flynn, president and chief executive officer of AAWH.

"DHL's investment and the long-term commercial agreement will markedly strengthen our scheduled-service business, and will enhance our ability to provide customers with superior service in key international markets. Further, it provides our company with a significant increase in our cash liquidity and a very attractive long-term revenue stream," Flynn said.

Pending all regulatory approvals, the transaction is expected to be completed either by the end of this year or the start of 2007.