GeoEye, DigitalGlobe merger talks reach impasse

DigitalGlobe rejects proposal for not adequately recognizing its 'superior track record of financial and operating performance.’

GeoEye Inc., a Herndon, Va., provider of geospatial information and insight to government and commercial clients, has been rebuffed in its latest proposal to acquire chief competitor DigitalGlobe Inc. for approximately $792 million.

In a May 7 statement DigitalGlobe said its board of directors “reviewed GeoEye's unsolicited acquisition proposal and unanimously determined that it substantially undervalues the Company in relation to DigitalGlobe's standalone business and financial prospects, and is not in the best interests of the Company's stockholders.”

The statement noted that GeoEye had been making private unsolicited proposals acquire DigitGlobe since February, and added that last Friday’s “proposal does not adequately recognize DigitalGlobe's superior track record of financial and operating performance as well as its constellation's greater capabilities.”

The Longmont, Colo., company also rejected GeoEye’s bid because it said it believed that the federal government’s budget process “would be favorable to DigitalGlobe, and that protracted discussions would be disruptive to the U.S. government in its decision-making process as well as create needless distraction to ongoing mission performance.”

DigitalGlobe said it was willing to discuss its acquiring GeoEye, and proposed a transaction by which DigitalGlobe's stockholders would own approximately 60 percent and GeoEye stockholders would own approximately 40 percent of the combined company.

On Friday, GeoEye said the combined company “would create the world's largest fleet of high resolution commercial imagery satellites” and “would be well-positioned to meet the evolving needs of the U.S. government and other customers in this fiscally constrained environment.”

But in his May 7 reply to GeoEye President and CEO Matthew O'Connell, DigitalGlobe President and CEO Jeffrey Tarr said, "We are enthusiastic about our prospects and the opportunities before us, and our ability to successfully execute on our strategic plan to create value for our customers and shareowners."

Tarr acknowledged that there are merits to an acquisition of GeoEye, but he said the company believes it is in the best interests of its shareowners and customers now to await the conclusion of the government budget process.

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