The rumour had been floating for six months, so now that its happened, it shouldn’t come as shock that MDA has been sold, right?
Anyone who isn’t surprised a little would have to be an insider. Maxar seemed to have turned a corner recently, and it looked like the need to sell off a business unit might not happen.
Bur perhaps new leadership at Maxar in the form of Dan Jablonsky and the board, wanted to sell MDA all along. It would solve two problems, the need for cash to lower the companies debt load, and offload the Canadian division that wasn’t quite a great fit for a company that was looking towards more U.S. defence contracts.
Here’s what we know so far.
Northern Private Capital (NPC) is leading a consortium of companies to buy MDA from Maxar for CAD $1 billion (US$765 million). The sale is being financed with a combination of equity and debt.
The other equity investors include Jim Balsillie, Senvest Capital along with funds managed by Senvest Management.
Debt financing is being led Scotiabank, Bank of Montreal, PointNorth Capital and Canso Investment Counsel. NPC is being advised by BMO Capital Markets and Scotiabank.
The company will move its headquarters back to Canada, likely to the Toronto region.
According to Maxar, the MDA division is “expected to generate approximately US$370 million and US$85 million in revenue and Adjusted EBITDA, respectively in 2019.”
John Risley, who co-leads Northern Private Capital said of the acquistion “over its 50-year history, MDA has grown from a BC-based start-up into a world-class space technology company and an anchor of Canada’s space program. We are thrilled to partner with Mike Greenley and the rest of the MDA team and are excited about the significant growth potential we see for the company. As a Canadian, I am so proud this iconic Canadian company will once again be owned and controlled in Canada.”
Dan Jablonsky, Maxar CEO said in press release “the sale of MDA furthers execution on the company’s near-term priority of reducing debt and leverage. It also provides increased flexibility, range, and focus to take advantage of substantial growth opportunities across Earth Intelligence and Space Infrastructure categories. After the transaction is complete, Maxar will retain leading capabilities in geospatial data and analytics, satellites, space robotics, and space infrastructure, and we will continue to have strong alignment with our defense and intelligence customers, the evolving requirements of civil governments, and the pursuit of innovation seen in the commercial marketplace. We thank the talented employees of MDA, who have built a world-class business with unique capabilities, and we look forward to working with them as a commercial partner and component supplier to Maxar going forward.”
The NPC led consortium is acquiring all of MDA’s Canadian assets and operations in the UK. NPC said the transaction is not subject to any shareholder approvals and that they expect the sale to close in 2020 after receiving regulatory approvals.
There will be more to this story after the New Year.