[09-21-12] Canadian satellite and information solutions provider MacDonald, Dettwiler and Associates (MDA)<\/b> and Loral Space & Communications<\/b> were notified by the Committee on Foreign Investment in the United States (CFIUS)<\/b> that it had concluded its review of MDA\u2019s proposed purchase of Space Systems\/Loral (SS\/L)<\/b> by a subsidiary of MDA and had determined that there were, \u201cno unresolved national security concerns with respect to the transaction,\u201d according to an MDA statement published Sept. 21.<\/p>\n
In late June, Loral reached an agreement with MDA to sell off its SS\/L subsidiary for $875 million. MDA\u2019s winning bid for SS\/L trumped that of larger vendors, including Lockheed Martin, Orbital Sciences, Astrium and Thales Alenia Space.
\n The acquisition potentially transforms MDA into a significant commercial communications entity as it adds SS\/L a top global provider of commercial communications satellites to MDA\u2019s portfolio and provides the company with critical mass in the U.S. market. Following the acquisition, MDA said it would have combined annual revenues of $1.9 billion as of the 2011 calendar year and a combined backlog of $2.8 billion as of March 31, 2012. SS\/L will retain its brand name and management team.
\n The CFIUS process stems from the Canadian government\u2019s national security concerns in 2008 when it blocked the $1.36 billion sale of MDA\u2019s own satellite arm to U.S. satellite manufacturer Alliant Techsystems (ATK) \u2013 the first time Canada used the powers of the Investment Canada Act to block a foreign acquisition of Canadian assets. Government officials at the time said they feared that the sale of the MDA unit would have led to the loss of crucial technology and hampered its satellite surveillance capabilities.
\n With the CFIUS confirmation, MDA\u2019s takeover of SS\/L moves one step closer to completion, though a much more difficult hurdle remains. On Sept. 12 Loral and MDA each received a second request for information from the U.S. Department of Justice in connection with the SS\/L purchase. MDA said the Department of Justice is reviewing the transaction as part of the regulatory process under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and that the company would \u201ccontinue to cooperate fully with the Department of Justice as it conducts its review of the proposed transaction in order to respond to any questions the Department may have.\u201d
\n RBC Capital Markets<\/b> Analyst Steve Arthur told that the regulator\u2019s second request for information prompted the brokerage firm to lower its rating on MDA. \u201cWe believe both sides are motivated to close on a transaction, but the Department of Justice delay adds great uncertainty,\u201d said Arthur.
\n Cormark<\/b> analyst Richard Tse echoed Arthur\u2019s sentiment that the Department of Justice\u2019s request adds risks for the potential deal. \u201cAt the very least, it potentially pushes out the timing of the closing of the transaction into 2013, as we believe the request will require some time on MDA\u2019s part to fully understand the nature of the request and gather the necessary information for review,\u201d said Tse.
\n If the transaction does clear, the results could reap huge benefits for MDA. According to Futron\u2019s<\/b> Satellite Orders Report, SS\/L has been awarded more commercial satellite contracts worldwide than any other company since 2005. Its full-year revenues for 2011 were $1.1 billion, with pro-forma operating EBITDA of $153 million. In a analysis report of the transaction published in July, Raymond James Analyst Chris Quilty called MDA\u2019s move, \u201cbold and potentially transformative.\u201d
\n \u201cTaken at face value, the purchase price represents a multiple of 6.4, trailing EBITDA,\u201d said Quilty. \u201cBut after adjustments such as tax step-up, pension liability and orbital receivables, the purchase price could more charitably be estimated at a multiple of 4.4, trailing EBITDA.\u201d
\nMDA President and CEO Daniel Friedmann said the acquisition is expected to provide global opportunities for his company\u2019s future growth in new markets fueled by strong consumer communications needs.
\n \u201cThis is a game changing transaction for our company,\u201d said Friedmann. \u201cWith 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\u2019s total revenues will come from the commercial market.\u201d
\nSS\/L also represents an opportunity for MDA to expand into the United States. The company\u2019s assets include a U.S.-based workforce of 3,200 employees and more than one million square feet of facilities.
\n \u201cSS\/L\u2019s business is fundamentally driven by the worldwide demand for television, digital audio, broadband Internet, mobile communications, and voice telephony,\u201d Friedmann added. \u201cBillions 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.\u201d
\n However, Quilty added that, from a strategic perspective, the acquisition was imperative for MDA. \u201cMDA had become overly dependent on the Canadian government and faced minimal growth prospects in its robotics, radar satellite, and optical satellite markets,\u201d said Quilty. \u201cThe acquisition of SS\/L instantly establishes MDA as the world\u2019s leading provider of high-power commercial communications satellites and increases MDA\u2019s exposure to new customers and the all-important.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
[09-21-12] Canadian satellite and information solutions provider MacDonald, Dettwiler and Associates (MDA) and Loral Space & Communications were notified by the Committee on Foreign Investment in the United States (CFIUS) that it had concluded its review of MDA\u2019s proposed purchase of Space Systems\/Loral (SS\/L) by a subsidiary of MDA and had determined that there were, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2],"tags":[],"class_list":["post-82428","post","type-post","status-publish","format-standard","hentry","category-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/82428"}],"collection":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/comments?post=82428"}],"version-history":[{"count":0,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/82428\/revisions"}],"wp:attachment":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media?parent=82428"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/categories?post=82428"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/tags?post=82428"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}