MDA shares jumped $10.76, or 24 per cent, to $56.40 in afternoon trading on the TSX.
"This is a game changer for MDA, one that meets many of our key strategic objectives in a single move," said MDA's CEO Daniel Friedmann, who told analysts the addition of Space Systems/Loral (SS/L) would give his company "critical mass" in the U.S. market.
Friedmann said the acquisition will result in having more than two-thirds of MDA's total revenue coming from the commercial market.
"Space Systems/Loral's business is fundamentally driven by the worldwide demand for television, digital audio, broadband internet, mobile communications, and voice telephony," he said.
"Billions 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."
Following the acquisition, MDA estimated it will have combined annual revenues of $1.9 billion and a combined order backlog of $2.8 billion.
"The acquisition is also expected to provide global opportunities for future growth as MDA enters markets fuelled by some of today's most compelling consumer communications needs," MDA said in a statement.
Palo Alto-based SS/L has 3,200 employees in the U.S. The existing management will be kept on.
MacDonald, Dettwiler is perhaps best known as the company behind the robotic arms used on the International Space Station and the now-mothballed U.S. space shuttles.
Just three months ago, the company said it would be laying off staff after the federal budget failed to include promised money for the Radarsat Constellation Mission.
Back in 2008, the Harper government took the rare move of blocking an attempt by MDA to sell its space division to American firm Alliant Techsystems. Government officials cited national security issues.