"This is a game changer for MDA, one that meets many of our key strategic objectives in a single move," MDA president and CEO Friedmann told a conference call with analysts Wednesday.
Friedmann said the addition of Space Systems/Loral Inc. will gives his Vancouver-area company "critical mass' in the U.S. market while enhancing global opportunities and also greatly diversifying its revenue base.
"Not only will this give us access to the U.S. market for SSL's products, but it will also finally open the door for our traditional business in surveillance, intelligence and robotics," he said.
"SSL is a global leader in commercial communications satellites. Combined with our market-leading strengths in essential information this transaction transforms MDA into a unique global communications and information company with a strong commercial focus."
MDA shares closed up $12.61, or 28 per cent, at $57.25 on the Toronto Stock Exchange.
Post acquisition, more than two thirds of MDA's revenues will come from the commercial market, compared with just under one third at present, Friedmann noted.
As well, the acquisition of one the world's largest and most experienced communications satellite suppliers will provide increased geographic diversification of its revenue base.
Prospects for MDA's revenue from government took a hit earlier this year when the company warned in March that the federal budget didn't include money needed to advance — as envisaged — Canada's Radarsat Constellation Mission, a three-satellite project begun in 2005.
MacDonald, Dettwiler is best known as the maker of the robotic arms used on the International Space Station and the now-retired U.S. space shuttles. It is also been involved in a variety of businesses that use satellites to collect information from space.
Under the definitive agreement announced late Tuesday, it is buying SS/L's business from Loral Space & Communications for US$774 million cash and will pay US$101 million for the company's 1.3-million square foot campus in Palo Alto, Calif.
Loral Space will also receive US$112 million in cash dividends from SS/L.
"Combining the world-recognized communications capabilities of MDA with SS/L creates a powerful space communications leader and enhances the business prospects, both commercial and government, for each of MDA and SS/L," Michael Targoff, chief executive officer of Loral Space & Communications, said in a statement.
SSL president John Celli, who is remaining with the company, said the combination is a good strategic fit for both.
"Together we will be in an even stronger position to support the growth requirements of both new and existing customers," Celli said.
SS/L is among the world's leading suppliers of commercial communications satellites. Together with MDA, the two companies received about 30 per cent of the world's communications satellite awards between 2007 and 2012, while SSL has, by itself, won close to half of all awards in the high-powered segment of the market, Friedmann said.
"The benefits of this transaction are not in the future," he added. "It will provide immediate benefits, including strong accretion for our shareholders."
Following the acquisition, MDA will have combined annual revenues of $1.9 billion ($1 billion from SSL) and a combined order backlog of $2.8 billion ($2 billion SSL) as of March 31.
"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.
"Space Systems/Loral's business is fundamentally driven by the worldwide demand for television, digital audio, broadband Internet, mobile communications, and voice telephony," Friedmann 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."
Friedmann also described the two companies culturally "very compatible," with both being engineering oriented. In SSL's case, 2,700 members of its workforce of 3,200 are either space engineers or technicians with the skills required to expand SSL's traditional business to new customers.
"Essentially, we will still be MDA, but larger, stronger and much better positioned for future growth and success," he said.Suggest a correction