May 7 (Bloomberg) -- DigitalGlobe Inc. shares fell 8.4 percent after the satellite-imagery company rejected an unsolicited offer from GeoEye Inc. for about $792 million, saying the bid “substantially undervalues” its business.
DigitalGlobe said yesterday that the offer wasn’t in the best interests of its shareholders and didn’t recognize the company’s financial and operating record and prospects.
GeoEye offered to buy Longmont, Colorado-based DigitalGlobe last week, a deal that would create the world’s largest commercial-imagery satellite company and help cope with U.S. defense budget cuts. GeoEye proposed $8.50 in cash and 0.3537 of a GeoEye share for each DigitalGlobe share.
Digital Globe fell to $15.06 at the close in New York today, while GeoEye’s stock dropped 5.2 percent to $23.54.
GeoEye’s bid was 26 percent higher than DigitalGlobe’s closing value on May 3, sending the stock up 22 percent the next day. GeoEye Chief Executive Officer Matt O’Connell said the company could be flexible about the mix of cash and stock involved in the offer.
While rejecting the bid, DigitalGlobe disclosed that GeoEye had in the past turned down bids to be acquired by DigitalGlobe.
DigitalGlobe said it had made an all-stock offer on March 2 that would have given GeoEye holders about 40 percent of a combined company. The offer was repeated on April 13, according to DigitalGlobe, which said the overture was rejected both times. The size of the bids wasn’t made public.
Beginning in February
GeoEye started making proposals to DigitalGlobe in February, DigitalGlobe said yesterday.
The company also said in the statement that its three satellites enable it to offer more imagery to the National Geospatial Intelligence Agency than GeoEye, and that its first-quarter revenue growth of 12 percent surpassed that of Virginia-based GeoEye.
President Barack Obama asked Congress for $71.8 billion in spending for intelligence agencies, according to the Defense Department and the Office of the Director of National Intelligence. That’s about $6.8 billion less than funding in 2011.
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