$2.4B lands Digital Globe

Both CEOs agree that the Westminster firm will see a “continuity.”

The day after a large Canadian communications firm completes its $2.4 billion purchase of DigitalGlobe in Westminster, employees will report to their same jobs.

DigitalGlobe, known for its highresolution photographs of Earth taken from space, will still be called DigitalGlobe. Its headquarters will still be in the former Bell Labs facility that looks like a satellite topped with a giant dish. And CEO Jeff Tarr will still be growing the company from its current 2,000 employees.

“Continuity of leadership is very important,” said Howard L. Lance, president and CEO of acquirer MacDonald, Dettwiler and Associates in Vancouver, British Columbia. “Jeff and I share that view. We want to make the day after closing the transaction to feel like the day before closing.”

MDA’s purchase of DigitalGlobe isn’t expected to close until the second half of 2017, pending approvals. The Canadian space firm, which announced the deal Friday, wants to build “end-to-end space systems” for Earth imagery and geospatial data. And it can’t do that without DigitalGlobe, one of world’s biggest names in satellite imaging and data analysis.

There will be some changes. DigitalGlobe shareholders will be paid about $35 per share — a mix of $17.50 cash and 0.3132 of MDA’s common stock. (MDA said that’s an 18 percent premium from Feb. 16, just before rumors of the deal began.) MDA will also assume $1.2 billion of debt. By the end of 2019, MDA will incorporate all of its U.S. operations in the country. And it plans to join the New York Stock Exchange while continuing to trade in Toronto.

DigitalGlobe’s stock price declined 8.2 percent Friday to close at $31.25.

MDA has satellite technology that helps deliver TV shows to DirecTV customers and satellite radio programs to SiriusXM subscribers; other satellites collect Earth intel for

surveillance purposes. While both companies use satellites for “Earth observation,” they differ in technologies, Lance said. MDA uses radar-based imaging systems that are not impacted by the weather. DigitalGlobe uses electrooptical technology.

“This allows us to combine the data for improved insights for our customers,” he said

The deal wasn’t a given. There was some head scratching. Analyst Bill Baker of Garp Research & Securities told Reuters that it seemed “strange that an asset so important to the United States would be sold to a foreign company.”

But Michelle Hadwiger, deputy director of Colorado’s Office of Economic Development and International Trade, said MDA’s commitment to keep DigitalGlobe in Westminster means more local investment.

“Their talent base will stay in Colorado, their headquarters will stay in Colorado. We anticipate that with the additional investment by a foreign firm, their investment will continue. … It’s definitely a huge relief,” Hadwiger said.

Tarr, DigitalGlobe’s CEO, said he has spent the last few months working on the transaction. Now he is focused on increasing the company’s long-term value.

“We continue to have, as Howard laid out, plans to grow the business, and with that growth we expect to create jobs in Colorado,” he said. “Very good jobs.”

DigitalGlobe needs to stick around Colorado a few more years to take full advantage of the state and local incentives it received in 2013. The state granted $4.349 million in jobgrowth incentives in return for creating 435 jobs over five years. At the time, DigitalGlobe employed 830 people in the state.

The city of Westminster also approved tax rebates of $6.2 million over 10 years.

“DigitalGlobe is an important member of the Westminster business community — but more importantly, the geospatial community,” said John Hall, the city’s economic development director, adding that as of December, the company employed 566 in the city. “It makes Westminster not just a regional hub but an international hub. They’re closely related to other activities up and down the Front Range. … And they provide a phenomenal number of highly skilled jobs, which is critical to the community.”

The key here — and why the state welcomed a company with jobs averaging $95,520 a year — is DigitalGlobe’s expertise in geospatial technology, which analyzes satellite images for extra data. That can help tax assessors identify homes with swimming pools or aid researchers by tracking coastal changes that could threaten local economies.

“It’s important that we maintain all the spectrums of the aerospace industry. And because (DigitalGlobe) offers the unique digital satellite imagery, there’s a lot of adjacencies that can translate to other industries,” said Hadwiger, with the state’s economic development office. “Firms are even using DigitalGlobe imagery to determine if companies are expanding or contracting. They take pictures of the parking lots to forecast whether the company is going to grow.”

According to the Colorado Space Coalition, Colorado ranked as the nation’s second-largest aerospace economy in terms of private aerospace jobs, behind California, said Janet Fritz, a spokeswoman for MetroDenver Economic Development Corp, which houses the coalition. Colorado, with about 25,500 aerospace employees, is also the headquarters for Ball Aerospace and United Launch Alliance. Space companies with local operations include Lockheed Martin, Sierra Nevada Corp. and Boeing Co.

“We’re encouraged by the announcement and plans for the headquarters to remain here in Westminster,” Fritz said. “DigitalGlobe is one of our largest aerospace employers with roughly 1,200 employees in the state.”

DigitalGlobe will be a stand-alone unit, though it’s still undetermined whether it will become MDA’s U.S. headquarters, Lance said.

MDA’s current U.S. headquarters are in the Bay Area, where it acquired SpaceSystems/Loral in 2012. The Palo Alto division, which employs 2,500, builds satellites and spacecraft for commercial use, such as beaming TV and radio signals. MDA also has an office near Washington, D.C., with 300 workers, an Ann Arbor, Mich., office with a couple hundred people, and a small office in Longmont with about 25 employees. The combined company will have 4,600 employees in the U.S. and 1,800 in Canada.

DigitalGlobe employs about 2,000 worldwide, including about 1,000 in Colorado.

“The way we organize the company is to have a very thin headquarters group,” Lance said. “We prefer to put the resources in the businesses. … This combination is really about growing the company, growing DigitalGlobe with technology and capital investment and growing our business in Canada. We’re hopeful this will be a win-win for employees in North America.”