Richmond-based MacDonald, Dettwiler and Associates Ltd. (TSX: MDA) announced this morning that it has acquired 100% of Space Systems/Loral, Inc. (SS/L) for US$875 million.
Headquartered in Palo Alto, California, SS/L is a global provider of commercial communications satellites.
In a press release, MDA said the acquisition transforms the company into a major player in commercial communications and provides it with critical mass in the U.S. market.
Daniel Friedmann, MDA's president and CEO, said, "This is a game-changing transaction for our company.
"With one move, we are bringing together two market leaders to create a unique global communications and information company with a strong commercial focus. Post-acquisition, more than two-thirds of MDA's revenue will come from the commercial market."
SS/L has a U.S.-based workforce of 3,200 employees, and over one million square feet of state-of-the-art facilities. SS/L will continue to operate under its own brand and management team.
Major customers of SS/L include DIRECTV and SiriusXM Satellite Radio.
"Space Systems/Loral's business is fundamentally driven by the worldwide demand for television, digital audio, broadband Internet, mobile communications and voice telephony," said Friedmann.
"Billions of people around the world depend on these services and demand continues to increase. By acquiring one of the major companies that enable these essential communications services, MDA will move immediately to the forefront of this growing business."
According to the release, SS/L has been awarded more commercial satellite contracts worldwide than any other company since 2005; its 2011 revenue was US$1.1 billion, with EBITDA of US$153 million.
Anil Wirasekara, MDA's executive vice-president and CFO, said, "This transaction is structured to provide MDA with a full tax step-up for the purchase price for U.S. tax purposes and the transaction is also immediately accretive to MDA's earnings per share." MDA will finance the transaction with cash on hand, a three-year note payable for US$101 million and approximately US$500 million in borrowed funds.
