Canada-based communications servicesÂ companyÂ MacDonald, Dettwiler and AssociatesÂ has agreed to acquire EarthÂ imaging services provider DigitalGlobe (NYSE: DGI) in an estimated $3.6 billion transaction toÂ expand MDA’s footprint in the global satellite imagery market.
MDA said Friday it will pay $2.4 billion in cash-and-stock for DigitalGlobeÂ — $17.50 in cash and one-third of an MDA share per share of DigitalGlobeÂ — and expects the deal to close during the second half ofÂ this year pending regulatory and shareholder approvals.
AÂ builder ofÂ technology used in satellites and ground stations, MDA will also assume $1.2 billion in debt from Westminster, Colo.-headquartered DigitalGlobe through the transaction.
The deal represents an 18-percent premium onÂ DigitalGlobe’s Feb. 16 closing stock price of $29.60 a day before the Wall Street Journal first reported details of the negotiations with MDA.
DigitalGlobe provides high-resolution Earth imagery to U.S. defense and intelligence agencies along with large commercial customers.
Upon closure, DigitalGlobe will keep its Westminster headquarters and operate as a subsidiary of MDA’s San Francisco-headquartered operating subsidiary SSL MDA Holdings the parent company created in late 2016Â to obtain eligibility for classified space contracts with the U.S. government.
MDA will further reorganize its structure to ensure the future parent of DigitalGlobe is incorporated in the U.S. by 2019 to continue on that “U.S. Access Plan,” as well as file to trade MDA’sÂ shares in the New York Stock Exchange in addition to the current Toronto Stock Exchange listing.
MDA CEO Howard Lance, who led Harris Corp. (NYSE: HRS) as chief executive in 2003-2011, will lead the combined company that expects to have 4,600 employees in theÂ U.S. and 1,800 in Canada.
DigitalGlobe merged with rival GeoEye in early 2013Â through an estimated $900 million cash-and-stock transaction to combine the two primary companies that participated in the National Geospatial-Intelligence Agency‘s EnhancedViewÂ contract for satellite imagery services at the time.
DigitalGlobe recorded $462 million in U.S. government revenue for 2016 — up 3 percent from 2015 — to represent 56.9 percent of total corporate sales.