Satellite imagery provider DigitalGlobe to buy larger rival GeoEye for $453 mn

After rejecting a buyout offer from its larger rival GeoEye in May, DigitalGlobe Inc is now buying its former suitor for $453 million in order to create the world's largest provider of commercial satellite imagery.  

With the Barack Obama administration considering a fresh round of defence budget cuts, since February this year GeoEye was pushing for a merger with DigitalGlobe, which made a counter proposal to take over GeoEye in an all-stock transaction in which DigitalGlobe's stockholders would own around 60 per cent of the combined company with GeoEye stockholders owning the remaining 40 per cent.

But after talks broke down, GeoEye went public with its $792.3 million buyout offer on 4 May, but DigitalGlobe rejected the deal saying that the hostile bid undervalued the company and its financial prospects. (See: DigitalGlobe rejects $792.3-mn bid from rival GeoEye)

Under the reverse takeover deal announced yesterday, Colorado-based DigitalGlobe has offered to pay GeoEye shareholders $20.27 per share, a premium of 34 per cent to GeoEye's closing price of $15.17 on 20 July.

Under the terms of the agreement, GeoEye shareowners will have the right to opt for either 1.137 shares of DigitalGlobe common stock and $4.10 per share in cash, or 100 per cent of the consideration in cash at $20.27 or 100 per cent of the consideration in stock

Founded in 1993 under the name WorldView Imaging Corporation, DigitalGlobe became EarthWatch Incorporated in 1995, before finally becoming DigitalGlobe in 2002.