MacDonald, Dettwiler & Associates Ltd., which made the robotic arm for NASA’s defunct space shuttle, climbed the most ever after buying Loral Space & Communications Inc.’s commercial satellite unit to tap growing demand for mobile entertainment and smartphones.
MacDonald Dettwiler jumped 28 percent to C$57.25 at the close in Toronto, the biggest increase since its initial public offering in 2000. The company, which will pay Loral $875 million, said the deal will add to earnings immediately.
“Satellites enable the cost-efficient delivery of television, radio, Internet, voice communications and communications on the move,” MacDonald Dettwiler Chief Executive Officer Daniel Friedmann said on a conference call today. “Billions of people around the world depend on these services. As demand for these services grows, the world needs more and higher-powered satellites to support them.”
The combined companies will have revenue of C$1.9 billion ($1.85 billion) and a backlog of C$2.8 billion, MacDonald Dettwiler projected. Before the deal, analysts had estimated the company would post sales of C$729.6 million this year.
The acquisition will be funded with cash, a three-year $101 million note and about $500 million in debt under a credit line from RBC Capital Markets, Richmond, British Columbia-based MacDonald Dettwiler said.
The deal, approved by the companies’ boards, is subject to regulatory clearance and expected to close later this year, MacDonald Dettwiler said.
Credit Suisse Group AG and JPMorgan Chase & Co. acted as financial advisers to Loral, and Willkie Farr & Gallagher LLP was legal counsel.
Bank of America and RBC Capital Markets provided financial advice to MacDonald Dettwiler.
Loral climbed 13 percent to $65.49 in New York, the largest gain since November 2010.