The aerospace technology company responsible for creating the Canadarm is moving back home to Canada after a 2017 acquisition saw the company’s headquarters move from Richmond, B.C., to Westminster, Colorado.
While MDA’s ownership will be returning to Canadian soil, that doesn’t mean it’s coming back home to British Columbia.
A consortium led by Toronto based investment firm Northern Private Capital announced today (December 30) that it has signed a definitive agreement to acquire MDA from its parent company Maxar Technologies for $1 billion. Upon closing of the deal MDA’s headquarters will return to Canada, its management team will continue to run operations out of Brampton, Ontario and will not return to Richmond B.C.
In 2017, as part of the company’s U.S. Access Plan, MDA acquired Colorado based DigitalGlobe and rebranded to Maxar Technologies. Part of the plan included the formation of MDA’s holding company headquartered in San Francisco, and moving MDA’s headquarters out of B.C. MDA’s Canadian, U.S. and international operations were then managed and controlled out of the United States.
However, MDA’s U.S. excursion appears to be over. The consortium led by Northern Private Capital will acquire all of MDA’s operations across Canada and the U.K. The deal is not subject to shareholder approval and the deal is expected to close in 2020 after clearing regulatory hurdles in both Canada and the U.S.
MDA businesses are expected to generate about US$370 million in 2019, according to a company press release. MDA also expects to continue to supply Maxar with certain components and subsystems, and the companies expect to sell each other’s complementary satellite data.
“The sale of MDA furthers execution on the company’s near-term priority of reducing debt and leverage,” said Maxar CEO Dan Jablonsky. “It also provides increased flexibility, range, and focus to take advantage of substantial growth opportunities across Earth Intelligence and Space Infrastructure categories. After the transaction is complete, Maxar will retain leading capabilities in geospatial data and analytics, satellites, space robotics, and space infrastructure, and we will continue to have strong alignment with our defense and intelligence customers, the evolving requirements of civil governments, and the pursuit of innovation seen in the commercial marketplace.”
Maxar’s debt is a major reason for the sale. The company was highly leveraged, which worried investors, according to Jamie Murray, head of research for Murray Wealth Group in media reports.
The sale of MDA along with a recent real estate sale in Palo Alto has reduced Maxar’s debt by $1 billion, according to Maxar CFO Biggs Porter. Porter said interest savings from the reduction of debt will offset the loss in cash flow from MDA. Porter said the company expects these factors to reduce earnings and cash flow by about $50 million.