The U.S. Department of Justice (DOJ) has requested further information from MacDonald, Dettwiler and Associates Ltd. (MDA) in its effort to acquire U.S. based Space Systems/Loral Inc. (SS/L). The second request is part of the ongoing review before the deal can clear the necessary regulatory hurdles and is not considered unduly unusual.
According to MDA “a second request may be a part of the review process under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”). The second request seeks additional information primarily regarding MDA’s Montreal satellite communications antenna and payload business.”
The request will delay the closing of the deal.
The deal which was announced on June 26 was for MDA to 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.
The combined company would have 5600 employees and positions MDA has a major player in the commercial communications market.