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Susan Smith
Susan Smith
Susan Smith has worked as an editor and writer in the technology industry for over 16 years. As an editor she has been responsible for the launch of a number of technology trade publications, both in print and online. Currently, Susan is the Editor of GISCafe and AECCafe, as well as those sites’ … More »

DigitalGlobe and GeoEye merger completion

February 7th, 2013 by Susan Smith

On January 31, 2013 DigitalGlobe, Inc.and GeoEye, Inc. announced the completion of their merger, creating one global leader in earth imagery and geospatial analysis, under the name DigitalGlobe.  According to the press release, the combined company will trade on the NYSE stock exchange as DigitalGlobe under the symbol DGI.  Based on the closing price of DigitalGlobe stock on January 30, 2013, the combined company has a market capitalization of $2.1 billion.

This story I wrote in July 2012 recounts the background of the two companies up to that time.

GeoEye and DigitalGlobe plan to merge

DigitalGlobe’s WorldView-3 satellite is still scheduled for launch in mid-2014.

Industry analysts and executives from both companies feel that the companies as a united force will be better able to provide a wider array of earth imagery and geospatial analysis, as well as help customers solve complex problems and compete in the global market. The decision was made pending the predicted shortfall in government spending.

Together, the combined company will have (from the press release):

  • An expanded global presence with a larger and more diverse revenue base;
  • A larger constellation with optimized orbits, coordinated scheduling and improved revisit rates;
  • Better integrated imagery collection, processing and analytics capabilities; and
  •  A strengthened balance sheet and financial profile with more than an expected $1.5 billion in net present value of operating expense and capital synergies, with approximately one-third of those synergy savings related to operating expense and the balance from capital savings.

The talent of both GeoEye and DigitalGlobe will remain with the company.

“In connection with the combination with GeoEye, DigitalGlobe has entered into new senior secured credit facilities in the aggregate amount of $700 million.  The facilities consist of a term loan facility of $550 million and a revolving credit facility of $150 million.  The Company has borrowed the full amount of the term loan facility to fund the combination with GeoEye and to refinance certain existing indebtedness of GeoEye and DigitalGlobe.  The revolving credit facility remains undrawn at closing.

Borrowings under the term loan facility will bear interest at an amount equal to the adjusted LIBOR rate plus 2.75%, with a step-down to the adjusted LIBOR rate plus 2.50% if the Company’s leverage ratio is equal to or less than 2.50:1.00.  The credit agreement contains affirmative and negative covenants that the Company believes are usual and customary for a senior secured credit agreement.  The credit agreement also requires the Company to maintain a maximum leverage ratio and a minimum interest coverage ratio.

Also in connection with the combination, GeoEye, discharged and called for redemption all of GeoEye’s 75 outstanding 9.625% Senior Secured Notes due 2015 and 8.625% Senior Secured Notes due 2016.

DigitalGlobe expects to announce fourth quarter 2012 and full year 2012 earnings on February 26, 2013, and intends to provide full-year 2013 financial guidance at that time.”

Look for more news on this new company in the near future.

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Categories: DigitalGlobe, GeoEYE, remote sensing, satellite imagery

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