(Corrects premium in paragraph 4 to "2.8 percent" from "18.2
percent" and stock closing price to "$34.05" from "$34.04")
By Aishwarya Venugopal
Feb 24 Canada's MacDonald Dettwiler and
Associates Ltd, a provider of satellite data used for
surveillance and communications, said it would buy U.S.-based
DigitalGlobe Inc for about C$3.10 billion ($2.40
billion) to strengthen its position in the satellite imagery
DigitalGlobe's satellites help provide high-resolution
images to its customers such as the U.S. Department of Defense
and companies including Facebook Inc and Uber
MDA said DigitalGlobe shareholders will get $17.50 in cash
and 0.3132 of its shares for each share held.
The offer translates to $35 per share based on its stock's
closing pricing on Feb. 16, before reports of a potential deal
emerged, MDA said. That represents a premium of 2.8 percent to
DigitalGlobe's Thursday close of $34.05.
Shares of DigitalGlobe were trading down 7.5 percent at
$31.50 in early trading on Friday. MDA's shares were marginally
higher at C$69.29.
Investors had expected a premium from the stock's Thursday
close and not a premium based on the stock's close before
reports of a potential deal, Ashwini Birla of Dougherty & Co LLC
"I am guessing DigitalGlobe investors are exiting
The deal includes assumption of DigitalGlobe's debt of
C$1.60 billion and is expected to close in the second half of
MDA, which restructured its U.S. operations in 2016, said it
would apply to list on the New York Stock Exchange as well and
look to incorporate the ultimate parent of DigitalGlobe in the
United States by the end of 2019.
"The transaction is a major step forward in our previously
announced U.S. Access Plan," MDA's Chief Executive Officer
Howard Lance said in a statement.
"We are committed to serving the U.S. Government as a
mission-critical partner with an expanded portfolio of
end-to-end solutions," he said.
Lance will lead the combined company.
DigitalGlobe, which will remain headquartered in
Westminster, Colorado, gets over 62 percent of its revenue from
contracts with the U.S. government.
Analyst Bill Baker of Garp Research & Securities, however,
said it seemed "strange that an asset so important to the United
States would be sold to a foreign company".
DigitalGlobe in 2014 used crowdsourcing to search for a
missing Malaysia Airlines jetliner, inviting internet users to
comb through satellite images of over 1,200 square miles (3,200
square km) of seawater for signs of wreckage.
MDA said the deal is expected to bring C$75 million-C$150
million in run-rate synergies by 2019 and add to its operating
earnings per share in 2018.
BofA Merrill Lynch is the financial adviser to MDA, while
PJT Partners and Barclays are advising DigitalGlobe.
(Reporting by Narottam Medhora and Aishwarya Venugopal in
Bengaluru; Editing by Shounak Dasgupta and Sriraj Kalluvila)