MDA to acquire DigitalGlobe for US $3.6B

MacDonald, Dettwiler and Associates Ltd. (TSX: MDA) has agreed to acquire DigitalGlobe, Inc. (NYSE: DGI) for US $35.00 per share in a combination of cash and stock. The transaction values DigitalGlobe at an equity value of approximately CDN $3.1 billion or US $2.4 billion, and an enterprise value of CDN $4.7 billion or US $3.6 billion, including assumption of DigitalGlobe’s CDN $1.6 billion or US $1.2 billion in net debt.

The transaction has been unanimously approved by the boards of directors of both companies, and is expected to close in the second half of 2017.

As of April 1, 2016, asset managers, T. Rowe Price Associates, Inc., Franklin Advisers, Inc., BlackRock, Inc., The Vanguard Group, Inc., and Dimensional Fund Advisors, LP collectively controlled over 50% of DigitalGlobe outstanding shares.

As part of the transaction, MDA will apply to list its shares on the NYSE in addition to the TSX.

Upon completion of the transaction, the combined company will continue to execute its U.S. Access Plan strategy. This will include further reorganization of all or part of the combined company’s corporate and operating structure to ensure that the ultimate parent of DigitalGlobe is incorporated in the U.S. by the end of 2019, subject to customary approvals.

MDA undertook a corporate reorganization in 2016 that included the formation of SSL MDA Holdings, Inc., the U.S. Operating Company of MDA, under the guidance and approval of the U.S. Department of Defense (DoD). SSL MDA Holdings currently operates under a Security Control Agreement (SCA) with DoD, allowing it to pursue and execute U.S. Government programs that require security clearances.
Howard L. Lance, President & CEO of MDA and President & CEO of SSL MDA Holdings, will lead the combined company.

The DigitalGlobe name, brand and headquarters in Westminster, Colorado will be maintained. In addition, three of DigitalGlobe’s current directors will be appointed to the MDA board of Directors. The combined company will have approximately 4,600 employees in the United States and will continue to employ more than 1,800 in Canada.

BofA Merrill Lynch is serving as financial advisor, and Vinson & Elkins LLP and Stikeman Elliott LLP are serving as legal counsel, to MDA. RBC Capital Markets is serving as financial and capital markets advisor to MDA, and BMO Capital Markets provided a fairness opinion. Fully committed financing for the transaction is being provided by Royal Bank of Canada and BofA Merrill Lynch.

PJT Partners and Barclays are serving as financial advisors, and O’Melveny & Myers LLP is serving as legal counsel, to DigitalGlobe. PJT Partners and Barclays provided fairness opinions to DigitalGlobe.

photo credit: DigitalGlobe

Ted Liu

Ted Liu, M.Sc. (Mining, Queen's), MBA (Finance, Toronto), is the Editor of Private Capital Journal, CanadaMetals.ca, TechWire.ca, and the former Editor of Canadian Private Equity. Ted has been passionately tracking Canadian private capital industry since 1992, having most recently served as Research Director for The Canadian Venture Capital and Private Equity Association (CVCA).

Ted is the architect of CVCA infobase, and is the architect of CPE Media's Financings.ca, Canada's most sophisticated and advanced all private capital and public market financing database.