Online retail giant Amazon has exercised options to acquire a 19.5% equity stake in air cargo leasing specialist Air Transport Services Group (ATSG).

Over the past five years Amazon has acquired several sets of warrants, which can be converted into ATSG shares.

The first of these warrants dates back to March 2016, when Amazon agreed to lease 20 freighters operated by ATSG to support rapid deliveries to U.S. customers. Amazon Air launched in 2016 and is expecting to operate over 80 Boeing 767Fs by the end of 2021.

At the release of its full-year financial results on Feb. 25, ATSG indicated that Amazon was likely to soon exercise its warrants.

“ATSG granted Amazon warrants in March 2016 to purchase up to 19.9% of ATSG’s outstanding common shares in conjunction with Amazon’s commitment to lease twenty 767s from ATSG,” ATSG said Feb. 25. “This group of warrants, for 14.9 million shares of ATSG at a strike price of $9.73, is fully vested, and we expect to be notified of their exercise plan by March 8, 2021. Amazon may settle the warrants for cash of $145 million and receive all 14.9 million shares, or receive fewer shares, equivalent in market value of the stock’s appreciation above the strike price, under a cashless exercise option.”

Further ATSG regulatory filings show that Amazon went ahead and exercised its share options on March 5, after requesting for its ownership cap to be raised to 19.999% from 4.999%. 

According to the filing, Amazon is acquiring 13.6 million ATSG shares for $9.73 each, valuing the transaction at $132 million. The online retailer holds further warrants, so this stake could go higher.

As of March 1, ATSG had 59,563,415 common shares, although this will change following the exercise of the warrants.

“On March 5, Amazon notified us that it will exercise warrants to purchase shares of ATSG common stock. The exercise of these warrants are subject to regulatory review, after which we expect Amazon to become our largest shareholder with approximately 19.5% of ATSG shares,” ATSG spokesperson Paul Cunningham told Aviation Daily. “We believe this action demonstrates confidence in ATSG’s future, and we and look forward to validating this confidence by continuing to deliver exceptional results for all our shareholders.”

The deal remains subject to U.S. regulatory approvals and the ownership cap change, which has a 61-day lead time.

Amazon declined a request to comment on the transaction.

ATSG is the world’s largest owner and operator of converted Boeing 767 freighters, specializing in the e-commerce and express markets. ATSG has three in-house airlines-Air Transport International, ABX Air and Omni Air International–and performs its own cargo conversions through Pemco Conversions.