Four months after announcing it’s intention to acquire Space Systems/Loral Inc., MacDonald, Dettwiler and Associates Ltd (MDA) has cleared the one remaining major hurdle as the U.S. Federal Trade Commission has completed its review and green-lighted the deal.
The news had an immediate effect with MDA’s stock surging as much as 15% before closing yesterday up 10%.
On June 26th MDA announced it would acquire 100% of of SS/L in a deal valued at US$875 million. SS/L is a global market provider of commercial communications satellites based in Palo Alto, California and has 3200 employees with US$1.1 billion in revenues in 2011.
The principal components of the transaction include:
1. MDA’s purchase of all of the equity of SS/L for US$774 million, payable in cash;
2. MDA’s purchase of certain real estate used in connection with SS/L’s business for US$101 million, payable through a bank guaranteed three year promissory note;
3. Cash dividends and other payments from SS/L to Loral equal to approximately US$112 million (representing the amount of SS/L’s cash balances as of March 31, 2012) plus an incremental per diem amount (equating to approximately US$5.8 million per month) from March 31, 2012 to and including the closing date of the transaction; and
4. The transaction includes other potential adjustments, and Loral will retain principal responsibility for the ViaSat litigation.
According to MDA following the acquisition the combined company will have annual revenues of $1.9 billion for the calendar year 2011 and a combined backlog of $2.8 billion though March 31 of this year.
The combined company will now have 5600 employees and positions MDA has a major player in the commercial communications market.