Why Loral Space & Communications Blasted Off

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Loral Space & Communications (NAS: LORL) have blasted off, up by as much as 16%, after the company agreed to sell its satellite manufacturing subsidiary.

So what: The company is selling its Space Systems/Loral subsidiary to Canadian rival MacDonald, Dettwiler and Associates for $875 million. The transaction will boost MacDonald Dettwiler's market share in the communications sector and give it more exposure to commercial and government customers.

Now what: Loral said it will also receive cash dividends and various other payments from the subsidiary that should total more than $135 million, and the board is looking at how to return some of those after-tax proceeds to shareholders after the divestiture. MacDonald Dettwiler expects the deal to become accretive to earnings immediately.

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The article Why Loral Space & Communications Blasted Off originally appeared on Fool.com.

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