MacDonald Dettwiler buys Space Systems Loral for $875M

Daniel Friedmann looking pleased.

The deal  may still officially require regulatory approval, but it looks like iconic Canadian space systems company MacDonald Dettwiler (MDA) has followed through on the stated intent of CEO Daniel Friedmann to buy a space company with US roots to gain a foothold in the lucrative US market.

The acquisition turns the company into a global communications player and opens doors for MDA to begin subcontracting US space projects like those for on-orbit satellite servicing through the US Defense Advanced Research Projects Agency (DARPA).

The essence of the deal is outlined in the June 27th, 2012 Reuters article "MacDonald Dettwiler to buy Loral subsidiary for $875mln" which states:

Loral Space & Communications Inc. has agreed to sell its satellite manufacturing subsidiary, Space Systems/Loral (SS/L) to Canadian communications rival MacDonald, Dettwiler and Associates Ltd for about $875 million.

The deal is set to enhance Macdonald Dettwiler's position in the communications arena and creates potential for increased business with both commercial and government clients.

The article goes on to quote an MDA spokesperson, who said that the acquisition "will immediately boost its earnings," make the expanded company a "major player in commercial communications" and provide it with "critical mass in the US market." 

The old and the new. From the June 27th, 2012 MDA conference call on the acquisition.

As outlined over a year ago in my May 9th, 2011 post "Fighting Words from MacDonald Dettwiler," the company always intended to buy a US based space company using money acquired through the January, 2011 sale of the MDA property-information business.

Even the recent MDA proposal to DARPA for on-orbit satellite servicing (as described in my February 19th, 2012 post "Details of MDA On-Orbit Satellite Servicing Proposal") is now also likely to move forward.

As explained by MDA CEO Friedmann during the June 27th, 2012 MDA conference call on the acquisition, MDA has consistently performed well in the design phase of the DARPA programs, but until now has been unable to guarantee that final manufacture would be on US soil, which is a requirement for the DARPA contract.

The MDA/ SSL deal includes a 1.3 million sq. ft state of the art satellite facility in Palo Alto, California which could be used for the final assembly of any DARPA contracted satellite.

Overview of MDA SS/L facilities in Palo Alto. From the June 27th, 2012 MDA conference call on the acquisition.

According to Friedmann, the acquisition will not immediately effect ongoing layoffs in Canadian facilities. As discussed in my May 14th, 2012 post "MDA & RADARSAT Constellation's War of the Words" the company has recently been laying off Canadian employees involved with the RADARSAT Constellation and Canadarm programs.