GeoEye Inc. will merge with DigitalGlobe in $900 million deal

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Herndon-based GeoEye, Inc. and DigitalGlobe Inc. of Longmont, Colo., announced Monday that the boards of directors of both companies have approved a definitive merger agreement, combining the companies in a stock and cash transaction valued at about $900 million. 

According to the companies, the deal will create a global leader in earth imagery and geospatial analysis with a more diversified revenue base, a stronger financial foundation and significant growth potential.

Under the terms of the agreement, GeoEye shareowners will have the right to elect either 1.137 shares of DigitalGlobe common stock and $4.10 per share in cash, or 100% of the consideration in cash ($20.27), or 100% of the consideration in stock (1.425 shares of DigitalGlobe common stock), for each share of GeoEye stock they own. The amount of cash and stock would be subject to proration depending upon the elections of GeoEye shareholders, such that the aggregate consideration mix reflects the ratio of 1.137 shares of DigitalGlobe common stock and $4.10 per share in cash.

Based upon the closing prices of DigitalGlobe and GeoEye as of July 20, 2012, the transaction delivers a premium of 34% to GeoEye’s July 20, closing price of $15.17 per share.  Upon completion of the transaction, DigitalGlobe shareowners are expected to own approximately 64% and GeoEye shareowners are expected to own approximately 36% of the combined company. 
It will be named DigitalGlobe and continue to trade on the NYSE under the symbol DGI.  The company will have a 10-member board of directors, with six initial members from the current DigitalGlobe board and four initial members from the board of GeoEye.  Jeffrey R. Tarr, President and CEO of DigitalGlobe, will serve as President and CEO of the new company.  It will be headquartered in Colorado, and plans a large presence in Missouri and Virginia.

“Together we will create a more efficient, more diversified and more capable company, better positioned to thrive in a time of unprecedented pressure on our nation’s defense budget,” Tarr said in a statement.”

“We are excited to be joining forces with DigitalGlobe as we believe this transaction represents the best path forward for our shareowners, our customers, and ultimately, the taxpayer,” said Matt O’Connell, CEO of GeoEye. 

Monday’s announcement pumped up the value of GeoEye’s shares, which were trading up over 34 percent, at about $20.35 per share.


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