MacDonald Dettwiler to Sell Property-Data Unit to TPG

MacDonald, Dettwiler & Associates Ltd., the maker of the robotic arm used on NASA space shuttles, agreed to sell its property-data unit to TPG Capital for about C$850 million ($849.6 million) after taxes.

The unit, with 1,050 workers and all except 30 of them in the U.S. or the U.K., serves insurance companies, lenders and lawyers, the Richmond, British Columbia-based company said today in a statement.

MacDonald Dettwiler had been exploring the sale of part or all of the company, after private-equity firms and competitors expressed interest, two people with knowledge of the matter told Bloomberg News last month. The company has no plans for more divestitures and will now focus on its information systems and geospatial services divisions.

“We are going to enter, in a much bigger way, new commercial markets like oil and gas, agriculture,” Chief Executive Officer Daniel Friedmann, 54, said today in an interview. “We will be looking for M&A opportunities.”

MacDonald Dettwiler rose C$1.83, or 3.6 percent, to C$52.41 at 3:59 p.m. in Toronto trading, the highest price since May 2007. Trading was halted before the news was announced, and resumed about a half hour later.

The company faced a regulatory block when it tried to sell its space business to Alliant Techsystems Inc. in 2008. Then- Industry Minister Jim Prentice rejected the C$1.33 billion transaction -- the first time since at least 1985 that Canada disallowed the purchase of a Canadian company by foreigners under the Investment Canada Act -- because it didn’t provide a “net benefit” to the country.

2008 Controversy

The 2008 sale was controversial in part because it involved the division responsible for the iconic Canadarm robotic arm that has been used in space missions since 1981.

Canadian lawmakers from all parties said at the time they were concerned that technology the country had funded in part would become subject to U.S. national security laws, and that Canada would lose its priority with Radarsat-2, a remote-sensing satellite that it uses to monitor contested Arctic waterways. Prentice cited the “jurisdictional” aspects of the transaction as relevant to his decision.

Canada’s second rejection under the foreign-investment review process came this week, as Industry Minister Tony Clement rejected BHP Billiton Ltd.’s $40 billion proposed buy of Potash Corp. of Saskatchewan. Clement evoked the same “net benefit” deficiency as Prentice had in 2008.

Competitive Process

The sale was a competitive process and TPG won from a shortlist of four bidders, MacDonald Dettwiler said during a conference call after today’s announcement. The breakup fee is about C$40 million, the company said. Following the divestiture, MacDonald Dettwiler will have about 2,200 workers, Friedmann said in the interview.

Bank of America Merrill Lynch served as MacDonald Dettwiler’s lead financial adviser. The transaction has fully committed financing, consisting of a combination of equity to be invested by TPG Capital and debt financing to be provided by affiliates of Bank of America Merrill Lynch, RBC Capital Markets and Highbridge Mezzanine Partners, the statement said.

Fort Worth, Texas-based TPG’s holdings include Energy Future Holdings Corp., the power producer formerly known as TXU Corp., which it bought for $43.2 billion in 2007, in the largest-ever leveraged buyout. Other companies include Freescale Semiconductor Inc. and Caesars Entertainment Corp.

To contact the reporter on this story: Will Daley in New York at wdaley2@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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