US earth imagery products provider DigitalGlobe Inc (NYSE:DGI) has sealed a USD900m (EUR741.8m) definitive deal to acquire geospatial information firm GeoEye Inc (NASDAQ:GEOY).
With this tie-up, the parties will form a global leader in earth imagery and geospatial analysis, they said jointly on Monday.
The agreement, unanimously cleared by both boards, provides GeoEye’s stockholders with the option to choose whether they will receive DigitalGlobe shares, cash or a mixture between the two in exchange for their own units. They will have the right to elect an all-cash payment of USD20.27 apiece or to get 1.425 common shares of DigitalGlobe. If they choose a combination, they will receive USD4.10 a share in cash plus 1.137 common units for each of their own.
The transaction carries a premium of 34% to GeoEye’s closing stock price on 20 July, based on DigitalGlobe’s closing on the same date. Once the move is concluded, which is expected to happen in the fourth quarter of the current year or the first quarter of 2013, GeoEye’s shareholders will have a 36% stake in the combined entity.
Jeffrey Tarr, the current president and CEO of DigitalGlobe, will continue to lead the Colorado-based business following the combination. The enlarged company will conservatively have a pro forma revenue base of over USD600m in 2012, after adjusting for the planned lower US government funding programme for fiscal 2013. It will also have five existing earth observation satellites and two under construction.
The merger needs to be greenlighted by both regulators and GeoEye stockholders. The latter’s biggest shareowner, Cerberus Capital Management LP, has already agreed to vote in favour of the deal. DigitalGlobe has obtained a USD1.2bn fully committed funding to refinance the outstanding debt of the resulting entity.
Investor Cerberus has noted it may invest in DigitalGLobe shares in advance of the complation of the combination.