According to the Wall Street Journal, MDA is in advanced talks to acquire DigitalGlobe. If a deal does emerge, it would be a significant acquisition.
As reported by the Journal’s Dana Mattioli, “terms of the potential deal couldn’t be learned, but given DigitalGlobe’s market value of $1.8 billion Friday afternoon and a typical takeover premium, it could be worth between $2 billion and $3 billion. It is also possible that the talks could fall apart before an agreement is reached, and another bidder could emerge.”
Strategically, it would appear to be a good move. It puts MDA in a stronger position in its effort to deal with U.S. government, particularly the Department of Defense. As well, owning the DigitalGlobe constellation of five high-resolution satellites and the data that comes with it, positions them to be a larger player on the data side, an increasingly growing market segment. It further diversifies their product base which might take some pressure off the softer satellite building procurement business segment.
DigitalGlobe stock is up 18% on the day, closing at $35, while MDA was down 1.4%, closing at $72.35.
DigitalGlobe had $181.8 million in revenue in the third quarter of 2016 compared to $173.3 for the same period in 2015, a 4.9% increase. DigitalGlobe projected revenues of $700 – $710 million for 2016. This would add significantly to the bottom line of MDA.
MDA meanwhile had $495.9 million in revenue in the third quarter of 2016 compared to $515.4 million for the same period of 2015, a 3.8% decline.
DigitalGlobe is set to report its full year and fourth quarter 2016 financial results on Monday, February 27, 2017 after the close of regular market trading.
MDA will release its fourth quarter and year end financial results on Thursday, February 23, 2017 after the close of regular market trading.