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Maxar Gets a Premium in Private Equity Deal and Firepower to Boot

By Calvin Biesecker, Rachel Jewett | December 16, 2022
DigitalGlobe HQ 2015

Maxar’s headquarters. Photo: Maxar Technologies

Maxar Technologies on Friday said it has agreed to be acquired by the private equity firm Advent International for about $4 billion in cash, a $53 per share price that is 129% above the closing price of the company’s shares on Thursday and about 34% above the high point of Maxar’s 52-week trading period.

The enterprise value of the deal is $6.4 billion, and includes the assumption of $2.4 billion in debt. With Advent’s resources and the increased financial flexibility gained by going private, Maxar will be able to accelerate portions of a new Earth observation satellite fleet and pursue new merger and acquisition targets, Daniel Jablonsky, Maxar’s president and CEO, told Defense Daily.

The acquisition is expected to close in mid-2023, subject to approvals by regulators and Maxar shareholders.  The deal terms include a 60-day “go-shop” period that expires Feb. 14, 2023 and allow Maxar’s board to solicit alternative acquisition proposals.

Once Advent completes the acquisition, Maxar plans to accelerate the launch of the Worldview Legion 7 and 8 satellites, which will eventually complement the first six Earth observation satellites that will begin to be launched early in 2023. Jablonsky said satellites 7 and 8 were planned for later this decade, although he declined to how much sooner they will become part of the Legion fleet.

In the past two years, Maxar has acquired Vricon, and more recently Wovenware. The $150 million Vricon deal provided artificial intelligence and machine learning (AI/ML) technology for 3D“digital twins” of Earth. Wovenware was a smaller acquisition but further bolstered Maxar’s capabilities in AI and software capabilities.

There is room for more deals in the AI/ML space, particularly in the area of modeling and simulation “that matches the real-world globe where people live, work, transit, fight wars, do those kinds of things,” Jablonsky said. “Having physics-based models that you can run AI across with multi-sensor, multi-element inputs into that data architecture and structure is really attractive, because it helps … our customers, the largest defense intelligence organizations in the world solve problems faster.”

“The most exciting things we find are the things that are growing fastest,” he said. “So, across our portfolio, space technologies and Earth intelligence products and services. What I say is we really like the stuff that’s tech oriented and that has fast growth and customer adoption rates.”

Most of the funding — $3.1 billion—is coming from Advent and British Columbia Investment Management Corporation is contributing $1 billion.

“We will prioritize Maxar’s commitment as a core provider to the U.S. defense and intelligence communities, and allies, while providing Maxar with the financial and operational support necessary space, to apply its technology and team members even more fully to the mission and programs of its government and commercial customers,” David Mussafer, chairman and managing partner of Advent, said in a statement.

Greg Konrad, an aerospace and defense analyst with Jefferies, said in a note to clients that the deal is positive for the space sector. “In our view, the deal points to the attractiveness and opportunities in space, which have been discounted by the public markets and ongoing consolidation which could occur as opportunities materialize,”

Caleb Henry, senior analyst for Quilty Analytics, said the deal values Maxar strongly and looks like a “healthier” private equity deal, as it seems that Advent intends to invest in Maxar versus adding debt to the company. 

In the larger imagery and sensing market, Henry pointed out that the take-private deal may give Maxar a competitive advantage against EO competitor Airbus, as Maxar will no longer have to share so much about its EO business strategy in quarterly calls. As imagery is such a small part of the much larger Airbus, the company doesn’t reveal as much about its EO business.

Maxar’s satellite imagery is used by the U.S. government, and it is part of the National Reconnaissance Office’s program to buy commercial imagery, with a contract worth up to $3.2 billion over 10 years. The imagery has also been front and center in the war in Ukraine. Its unclassified imagery was used in countless news stories from the early days of the war when Russia first invaded Ukraine, even underpinning reporting by The New York Times and BBC about the massacre in Bucha.

The deal also gives Maxar cash to fuel its competition against the imagery SPACs Planet, BlackSky, and Satellogic, which went public in the last two years, Henry said. 

“This deal basically gives Maxar SPAC money they didn’t get because they were already public,” Henry said. “I would expect Maxar to foster some consolidation on the analytics side, because that is where they have put a lot of their focus in recent years. The Vricon acquisition was really transformative for them as a company. I would expect that they become a buyer of at least one, if not more, analytics firms.”

The space industry will likely be watching how Advent invests across the EO and manufacturing business.

There are more than 80 Maxar-built satellites on orbit, and Maxar has supported many commercial customers including Intelsat and SiriusXM radio satellites. Earlier this year, L3Harris Technologies selected Maxar as a subcontractor on its Space Development Agency Tranche 1 Tracking Layer contract to build 14 spacecraft platforms.

However, Maxar has had challenges manufacturing the Jupiter 3 satellite for Hughes Network Systems, an EchoStar subsidiary. The satellite was originally supposed to launch in 2021, but has been delayed multiple times. Recently, Maxar agreed to waive about $50 million in fees to EchoStar to compensate for additional delays in the program.

“Maxar has been challenged by the lack of a strong digital payload that it can sell to the market, and also in the past, felt very overexposed to the commercial GEO [Geostationary Orbit] market,” Henry said. “Maxar has diversified with early success into the civil and defense markets. Because of Advent’s focus on the defense side in the announcement, my guess would be they are enthusiastic about Maxar’s growth in the defense market, particularly with the Space Development Agency. I imagine seeing more of that.”

Via Satellite sister publication Defense Daily first published a version of this article.