Home » DigitalGlobe and GeoEye Sign Merger Agreement
LONGMONT, Colo. and HERNDON, Va. – DigitalGlobe and GeoEye announced that the boards of directors of both companies have unanimously approved a definitive merger agreement under which the companies will combine in a stock and cash transaction valued at approximately $900 million. The combination of DigitalGlobe and GeoEye will create a global leader in earth imagery and geospatial analysis with a more diversified revenue base, a superior financial foundation and significant growth potential.
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 percent of the consideration in cash ($20.27) or 100 percent 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 percent 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 percent and GeoEye shareowners are expected to own approximately 36 percent of the combined company. The transaction structure will allow both DigitalGlobe and GeoEye shareowners to participate in the substantial value creation opportunity resulting from this combination.
The combined company will be named DigitalGlobe and continue to trade on the NYSE under the symbol DGI. It will have a 10-member board of directors, with six initial members from the current DigitalGlobe board and four initial members from the board of GeoEye. Jeffrey R. Tarr, president and chief executive officer of DigitalGlobe, will serve as president and chief executive officer of the combined company, and General Howell M. Estes III, chairman of the Board of DigitalGlobe, will serve as chairman. It is anticipated that, after close, Matt O'Connell, chief executive officer and president of GeoEye, will assist the management of the combined company in an advisory capacity. The company will be headquartered in Colorado, have a large and important presence in Missouri and Virginia, and maintain offices in other locations around the globe.
“The combination of DigitalGlobe and GeoEye creates a global leader in earth imagery and geospatial analysis,” said Tarr. “Together we will create a more efficient, more diversified and more capable company, better positioned to thrive in a time of unprecedented pressure on our nation’s defense budget. Once the merger is complete, we will emerge as an industry-leading, geospatial information business that does even more to help our customers better understand our changing planet. In so doing, we will further enable our customers to save time, save money and save lives.”
Tarr continued, “Bringing together the world-class talent and experience of team members from both companies, we will inspire a new wave of innovation and create value for shareowners who have invested their capital in the promise of our industry.”
“We are excited to be joining forces with DigitalGlobe as we believe this transaction represents the best path forward for our shareowners, our customers, and ultimately, the taxpayer,” said Matt O'Connell, chief executive officer and president of GeoEye. “With an impressive constellation of commercial earth imaging satellites and complementary services, the combined company will be well positioned to achieve efficient growth, expand our international reach and create value for all stakeholders. Given the stock component, our shareowners will have the opportunity to participate in the significant growth and value creation potential. I look forward to working closely with the management teams of both companies to support this transaction, and establish the foundation for what will be a dynamic and enduring company.”
Benefits of the Transaction
Increased Scale and Customer Diversification
The combined company will conservatively have a pro forma 2012 revenue base of more than $600 million, after adjusting for the currently proposed lower U.S. government fiscal year 2013 EnhancedView funding plan. As a result, the combined company would therefore have better revenue certainty, lower dependence on the U.S. government as a source of revenue, a higher percentage of commercial and international revenue and be well positioned for future growth.
At close, the combined company is expected to have a constellation of five earth observation satellites, and a broad suite of high-value geospatial production and analytic services. The combined company will also have two state-of-the-art satellites under construction, WorldView-3 and GeoEye-2. Over time, the combined company plans to maintain an optimized three-satellite constellation that will meet the needs of the U.S. government, international governments and commercial customers, while delivering better returns to shareowners. Taken together with other operating efficiencies, the net present value of future savings is estimated to be more than $1.5 billion.
Compelling Solution for U.S. Government
By bringing the two companies together, this combination will enable the U.S. government to meet the requirements of the EnhancedView program at substantial savings to the U.S. taxpayer. In addition to the compelling savings, the U.S. government and other customers will benefit from an optimized constellation and better integrated imagery collection, processing and analytics. In return, shareowners should reasonably expect a more stable and predictable funding environment.
Value for All Customers
The combination will deliver extraordinary value to customers around the globe. By bringing together the imagery collection, processing and analytic capabilities of both companies, it will be better able to serve a wide range of customer needs and compete in a high-growth and dynamic global market.
On a pro forma basis, the combined company will have a robust set of financial attributes and expects to significantly improve its long-term operating model compared with either company on a standalone basis.