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MacDonald Dettwiler to Purchase DigitalGlobe in $3.6B Deal

Canada-based communications services company MacDonald, Dettwiler and Associates has agreed to acquire Earth imaging services provider DigitalGlobe (NYSE: DGI) in an estimated $3.6 billion transaction to expand MDA’s footprint in the global satellite imagery market.

MDA said Friday it will pay $2.4 billion in cash-and-stock for DigitalGlobe — $17.50 in cash and one-third of an MDA share per share of DigitalGlobe — and expects the deal to close during the second half of this year pending regulatory and shareholder approvals.

A builder of 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 on 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 2016 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’s 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 the U.S. and 1,800 in Canada.

DigitalGlobe merged with rival GeoEye in early 2013 through an estimated $900 million cash-and-stock transaction to combine the two primary companies that participated in the National Geospatial-Intelligence Agency‘s EnhancedView contract for satellite imagery services at the time.

DigitalGlobe itself made two acquisitions in early 2016: a $140 million purchase of geospatial data services provider The Radiant Group and subsequent buy of science and analytics company Timbr.

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.

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