Digital Globe WorldView 2 Satellite
U.S. Satellite imagery providers DigitalGlobe and GeoEye have announced on Monday that the boards of directors of both companies have unanimously approved a definitive merger agreement working through the acquisition of GeoEye by Digital Globe.
This agreement comes after GeoEye first proposed to acquire Digital Globe in May, an offer that was declined by the board of Digital Globe.
The merger of the two companies had become critical as their biggest customer (50 percent revenue of the new entity), the U.S. Government through its National Geospatial Intelligence Agency (NGA) is sharply cutting its commercial imagery budget in the coming years.
Pre-acquisition Digital Globe sales were 60 percent from U.S. government, 25 percent from other governments, 10 percent from LBS (Google, Nokia, NAVTEQ, Microsoft, etc.) and 5 percent “other“.
This agreement comes after GeoEye first proposed to acquire Digital Globe in May, an offer that was declined by the board of Digital Globe.
The merger of the two companies had become critical as their biggest customer (50 percent revenue of the new entity), the U.S. Government through its National Geospatial Intelligence Agency (NGA) is sharply cutting its commercial imagery budget in the coming years.
Pre-acquisition Digital Globe sales were 60 percent from U.S. government, 25 percent from other governments, 10 percent from LBS (Google, Nokia, NAVTEQ, Microsoft, etc.) and 5 percent “other“.
Terms of the acquisition
Under the terms of the agreement, GeoEye shareowners will have the right to elect either 1.137 shares of DigitalGlobe common stock and $4.10 per share in cash, 100% of the consideration in cash ($20.27) or 100% of the consideration in stock (1.425 shares of DigitalGlobe common stock), for each share of GeoEye stock they own, with the amount of cash and stock subject to proration depending upon the elections of GeoEye shareholders, such that aggregate consideration mix reflects the ratio of 1.137 shares of DigitalGlobe common stock and $4.10 per share in cash.
Based upon the closing prices of DigitalGlobe and GeoEye as of July 20, 2012, the transaction delivers a premium of 34% to GeoEye’s July 20, 2012 closing price of $15.17 per share. Upon completion of the transaction, DigitalGlobe shareowners are expected to own approximately 64% and GeoEye shareowners are expected to own approximately 36% of the combined company.
The combined company will be named DigitalGlobe and continue to trade on the NYSE.
Under the terms of the agreement, GeoEye shareowners will have the right to elect either 1.137 shares of DigitalGlobe common stock and $4.10 per share in cash, 100% of the consideration in cash ($20.27) or 100% of the consideration in stock (1.425 shares of DigitalGlobe common stock), for each share of GeoEye stock they own, with the amount of cash and stock subject to proration depending upon the elections of GeoEye shareholders, such that aggregate consideration mix reflects the ratio of 1.137 shares of DigitalGlobe common stock and $4.10 per share in cash.
Based upon the closing prices of DigitalGlobe and GeoEye as of July 20, 2012, the transaction delivers a premium of 34% to GeoEye’s July 20, 2012 closing price of $15.17 per share. Upon completion of the transaction, DigitalGlobe shareowners are expected to own approximately 64% and GeoEye shareowners are expected to own approximately 36% of the combined company.
The combined company will be named DigitalGlobe and continue to trade on the NYSE.
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