Why GeoEye and DigitalGlobe Both Soared
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So what: The deal is valued at $900 million and will create the largest satellite-imagery company in the world. That price also puts a 34% premium on GeoEye shares. By acquiring GeoEye, DigitalGlobe will diversify its business away from government contracts, which have been the bulk of sales.
Now what: DigitalGlobe CEO Jeff Tarr will lead the combined company, and he expects the transaction to close later this year or early next year. The combined company will retain the DigitalGlobe name. Interestingly, DigitalGlobe had previously spurned a takeover offer from GeoEye for roughly $800 million. Cost-saving synergies are valued at $1.5 billion over two years. Sector consolidation is the name of the game.
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The article Why GeoEye and DigitalGlobe Both Soared originally appeared on Fool.com.Fool contributorEvan Niuholds no position in any company mentioned. Check out hisholdings and a short bio.Motley Fool newsletter serviceshave recommended buying shares of GeoEye. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days. The Motley Fool has adisclosure policy.