Company exploring satellite imagery
Canada’s MacDonald, Dettwiler and Associates Ltd. is making a $ 3- billion bet on a rapidly growing market: Looking at stuff from outer space.
The Richmond, B.C.-based technology company announced plans to acquire American satellite imagery provider DigitalGlobe Inc. Friday. DigitalGlobe, known for inviting Internet users to look through satellite images of seawater for the wreckage of a missing Malaysia Airlines jetliner in 2014, provides technology that can make out an object as small as the size of a shoe on the earth’s surface from space.
MD A chief executive Howard Lance said DigitalGlobe’s foothold in the American space market was a major selling feature, with about two-third soft he target company’ s revenue currently coming from U.S. government contracts.
But as time goes on, Lance expects private companies to make up a larger share of clients.
“DigitalGlobe surfaced as the target that made the most sense,” Lance said. “Growth prospects over time are going to be in commercial and international government.”
The earth observation market is already l arge, with market research and consulting firm Northern Sky Research valuing it at about US$ 2 billion in 2015. As it becomes less and less expensive to collect and analyze the vast amounts of data generated by satellites, Northern Sky Research expects the earth observation market to grow to more than US$5 billion by 2025.
Claude Rousseau, r esearch director at Northern Sky Research, said people in industries ranging from oil and gas to finance are interested in satellite earth observation.
He said companies are already using the technology to calculate production rates based on observed activity at factories in China and predict retail sales based on the number of cars in store parking lots.
“That data is used now in many more fields of human activity than ever before,” Rousseau said. “It’s really diversified quite a bit.”
Jeffrey Tarr, chief executive of DigitalGlobe, said in a release the acquisition will help the company “accelerate our vision of being the leading source of information about our changing planet.”
The company has customers in 90 countries.
MDA is already in the satellite business, with communications satellites in the U. S. and some earth observation in Canada. Founded in 1969, it is best known for making the Canadarm on the NASA space shuttle and the Canadarm2 and Dextre remote manipulation systems on the International Space Station.
There may be growth opportunities in the commercial sector, but the vast majority of money spent on space and satellites still comes from governments. Most satellite applications today are for defence, the environment and climate monitoring.
Lance said one of the reasons the company hired him in May is because he’s an American citizen, which will help MDA accomplish its goal of capturing a larger share of the U. S. space market.
Any foreign- owned company that wants to do classified technology business with the U. S. government must be controlled by U. S. citizens.
Lance said MDA plans to continue to invest in Canada and keep the country as its home market, but left the door open to the possibility of eventually moving its headquarters to the U.S.
“What the ultimate structure of the company looks like in order to satisfy the commitment we’ve made to DigitalGlobe by the end of 2019 remains to be seen,” Lance said.
“As a public company that wants to grow and create value for all of its stakeholders, we need to be in the U. S. market.”
Lance said MDA plans on focusing on getting value out of the DigitalGlobe acquisition and doesn’t have any more large mergers on the horizon.
“For t he next several years, we’re going to be really focused on our core business, growing it and closing this transaction and then getting the full value out of it,” he said.
“You shouldn’t be expecting us to be looking for anything materially large for a couple of years.”