Robbins Arroyo LLP: Acquisition of DigitalGlobe, Inc. (DGI) by MacDonald Dettwiler & Associates Ltd. (MDA) May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of DigitalGlobe, Inc. (NYSE: DGI) by MacDonald Dettwiler & Associates Ltd. (“MDA”) (Toronto: MDA). On February 24, 2017, the two companies announced the signing of a definitive merger agreement pursuant to which MacDonald Dettwiler & Associates will acquire DigitalGlobe. Under the terms of the agreement DigitalGlobe shareholders will receive $17.50 in cash and 0.3132 MDA common shares with a value of $17.50 per share based on MDA’s last unaffected closing price on February 16, 2017, the combined value of which is equivalent to $35.00 for each share of DigitalGlobe common stock.
Is the Proposed Acquisition Best for DigitalGlobe and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at DigitalGlobe is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $35.00 merger consideration is significantly below the target price of $44.00 set by an analyst at Jefferies on November 15, 2016, and the target price of $39.00 set by an analyst at Piper Jaffray on November 29, 2016. Additionally, in the last three years DigitalGlobe traded as high as $42.73 on February 25, 2014, and most recently traded above the merger consideration – at $35.02 – on April 9, 2015.
On October 25, 2016, DigitalGlobe reported strong earnings results for its third quarter 2016. DigitalGlobe reported net income of $15 million for the three months ended September 30, 2016, a 56.3% increase over the same period of the prior year. DigitalGlobe has also beaten analyst estimates for adjusted net income, revenue, and adjusted earnings per share for the past four consecutive quarters. In commenting on these results, DigitalGlobe Chief Executive Officer Jeffrey R. Tarr remarked, “We are pleased to report that solid execution of our strategy is delivering better than expected results. With the upcoming launch of WorldView-4 and our acquisition of Radiant Group, we will be even better positioned to support our customers as the leading commercial source of earth imagery and geospatial analytics.”
In light of these facts, Robbins Arroyo LLP is examining DigitalGlobe’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
DigitalGlobe shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
DigitalGlobe shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.