VANCOUVER — The company that built the Canadarm that has been used for years for robotic work on the space shuttle and the International Space Station is selling its space and satellite business to a big U.S. defense contractor for more than $1.3 billion.
MacDonald, Dettwiler and Associates Ltd., a Vancouver-based company known as MDA, said late Tuesday it will sell the business to Alliant Techsystems of Minneapolis for $1.325 billion in cash.
MDA CEO Daniel Friedmann said ATK will be able to grow the business that developed the Canadarm, in Brampton, just northwest of Toronto, in a way not possible for MDA without spending a significant amount of money to acquired U.S. domiciled operations.
''Our U.S. customers who are very keen on our capabilities will have an easier time accessing and doing business with us,'' Friedmann told a conference call with analysts.
''The career opportunities and the work for our employees who transfer is significantly enhanced. Our information systems capabilities are absolutely essential to ATK's expansion plans,''
The former Spar Aerospace of Brampton originally developed the Canadarm but sold its space robotics business to MDA in 1999. The robotic arm has long been one of Canada's most important technology contributions to the U.S. space industry and has been used by Canadian and U.S. astronauts in for handling equipment shipped on the shuttle to help build the space station.
Friedmann said the sale of the information systems and geospatial services business will allow the company to focus management and financial resources exclusively on its rapidly growing information products business.
''We see lots of opportunities to expand in that market and in our geographies and in many of those cases an acquisition is the most cost effective and time effective way to do that,'' Friedmann said in an interview.
MDA planned to use most of the expected $1.2 billion after-tax proceeds from the deal to invest in acquisitions to build the business, which provides specialized data used by the housing and real estate industry, governments and security agencies around the world.
However, Friedmann said if there were no deals to be made, the company would look to return some of the cash to shareholders though stock buybacks or maybe a special dividend.
Shares in MDA were down 15 cents at $42.51 on the Toronto Stock Exchange before being halted late in the day pending the announcement. Based on the company's share price on Tuesday, MDA has a stock market value of about $1.76 billion.
For the nine months ended Sept. 30, 2007, MDA said the businesses the company was keeping earned revenue of $576.4 million. That compared with reported revenue for the entire company of $910.1 million for the same period of time.
The operations being sold will be led by MDA's executive vice-president of information systems, Magued Iskander.
ATK, a producer of solid rocket motors and a prime contractor to NASA, will create a separate business group, ATK Space Systems, which will include the operations being acquired from MDA, as well as other ATK assets in the U.S.
''We will benefit greatly from the addition of MDA's talented workforce, which like our own is known for its innovative, lower cost, yet highly reliable accomplishments,'' ATK chairman and CEO Dan Murphy stated.
''The operations we are acquiring are very complementary, and fully align with our strategic objective to provide complete end-to-end content to our domestic and international customers.''
After closing the sale of the division, MDA is expected to have about 1,100 employees, in Canada, the United States and Europe, down from more than 3,000.
MDA denied rumours last summer that the company was trying to sell the division. A report had suggested U.S. defence contractors Lockheed Martin Corp., Raytheon Co., Northrop Grumman Corp. and Alliant Techsystems as possible suitors.
MDA technology has supported manned space flight for over 25 years, as well as projects in hostile environments on Earth. However, the company generates a growing chunk of its revenues from specialized satellite mapping data used by real estate agents, governments, defence agencies and the financial industry.
Key to the company after the deal will be its house information package business.
The deal, which has been unanimously approved by each company's board of directors, is expected to close early in the second quarter, and is subject to various regulatory and MDA shareholder approval.
The Canadian Space Agency said Tuesday it was watching the deal with interest, but declined to otherwise comment on the proposed sale.
Federal NDP Industry critic Peggy Nash called the sale ''very worrisome'' but said it wasn't unexpected, considering the Conservative government's position on foreign acquisitions of Canadian firms.
''It's no surprise under this government that takes a completely hands-off attitude when it comes to the manufacturing sector,'' she said.
''It's technology that Canadians have paid for, invested in and developed and it's been a source of pride here in Canada.''
MDA also announced Tuesday the company has adopted a shareholder rights plan.
The rights plan, which has conditionally been approved by the Toronto Stock Exchange is subject to ratification by shareholders, requires potential takeover bids for the company meet certain requirements.
