DEFM14A 1 d383589ddefm14a.htm DEFM14A DEFM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Rule 14a-101)

 

 

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to §240.14a-12

DIGITALGLOBE, INC.

(Name of Registrant as Specified in Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

     

  (2)  

Aggregate number of securities to which transaction applies:

 

     

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

     

  (4)  

Proposed maximum aggregate value of transaction:

 

     

  (5)  

Total fee paid:

 

     

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
  (1)  

Amount Previously Paid:

 

     

  (2)  

Form, Schedule or Registration Statement No.:

 

     

  (3)  

Filing Party:

 

     

  (4)  

Date Filed:

 

     

 

 

 


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PROXY STATEMENT OF DIGITALGLOBE, INC.   

PROSPECTUS OF MACDONALD,

DETTWILER AND ASSOCIATES LTD.

 

 

LOGO

   LOGO             

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

To the Shareowners of DigitalGlobe, Inc.:

On February 24, 2017, DigitalGlobe, Inc., a Delaware corporation (which we refer to as “DigitalGlobe”), entered into an Agreement and Plan of Merger (which, as may be amended, we refer to as the “merger agreement”) with MacDonald, Dettwiler and Associates Ltd., a corporation organized under the laws of British Columbia (which we refer to as “MDA”), SSL MDA Holdings, Inc., a Delaware corporation and wholly owned subsidiary of MDA (which we refer to as “Holdings”), and Merlin Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Holdings (which we refer to as “Merger Sub”), pursuant to which, among other things, Merger Sub will be merged with and into DigitalGlobe (which we refer to as the “merger”), with DigitalGlobe surviving the merger as an indirect wholly owned subsidiary of MDA.

If the merger is completed, you will receive 0.3132 of an MDA common share and US $17.50 in cash, without interest, for each share of DigitalGlobe common stock (which we refer to as “DigitalGlobe common stock”) that you own immediately prior to the effective time (which we refer to as the “merger consideration”). This exchange ratio is fixed and will not be adjusted to reflect changes in the price of DigitalGlobe common stock or MDA common shares prior to the completion of the merger. It is a condition to the completion of the merger that the MDA common shares to be issued in connection with the merger be authorized for listing on (a) the Toronto Stock Exchange (which we refer to as the “TSX”) and (b) the New York Stock Exchange (which we refer to as the “NYSE”) or the Nasdaq Stock Market LLC (which we refer to as the “NASDAQ”). Based on the closing price of MDA common shares of C$73.40 on February 16, 2017 and the U.S. dollar-to-Canadian dollar exchange rate of 0.7612, the merger consideration represented a premium of (a) approximately 18% over the closing price per share of DigitalGlobe common stock on February 16, 2017, the last full trading day prior to media reports that DigitalGlobe and MDA were in merger discussions and (b) approximately 21% over the 30-day average unaffected share price of DigitalGlobe common stock prior to February 16, 2017.

Each share of Series A convertible preferred stock of DigitalGlobe (which we refer to as “DigitalGlobe preferred stock”) issued and outstanding immediately prior to the effective time of the merger (other than shares of DigitalGlobe preferred stock held directly or indirectly by MDA, DigitalGlobe or any of their respective subsidiaries or shares of DigitalGlobe preferred stock owned by holders who properly exercise their appraisal rights under the Delaware General Corporation Law (which we refer to as “DGCL”)) will be converted into the right to receive the merger consideration that the holder of such shares of DigitalGlobe preferred stock would have been entitled to receive had such holder, immediately prior to the effective time, converted such DigitalGlobe preferred stock into DigitalGlobe common stock in accordance with the applicable certificate of designation.

Based on the estimated number of shares of DigitalGlobe common stock expected to be outstanding at the closing of the merger, MDA expects to issue 21,466,584 MDA common shares in the merger (including 600,556 MDA common shares expected to be reserved for issuance, which will be issuable upon the vesting of certain DigitalGlobe restricted stock units following the effective time of the merger). Based on the estimated number of MDA common shares that are expected to be outstanding at the closing of the merger, DigitalGlobe securityholders will own approximately 37.1% of the combined company after completion of the merger (assuming the issuance of the 600,556 MDA common shares expected to be reserved for issuance in respect of certain DigitalGlobe restricted stock units).

The value of the merger consideration will fluctuate with the market price of MDA common shares. You should obtain current share price quotations for DigitalGlobe common stock and MDA common shares. DigitalGlobe common stock is listed on the NYSE under the ticker symbol “DGI,” and MDA common shares are listed on the TSX under the ticker symbol “MDA.”


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You are cordially invited to attend a special meeting of DigitalGlobe shareowners to be held at 9:00 am, Mountain Time, on July 27, 2017, at DigitalGlobe’s corporate headquarters at 1300 West 120th Avenue, Westminster, Colorado 80234 (which we refer to as the “special meeting”). At the special meeting, among other matters, we will ask you to consider and vote on the approval and adoption of the merger agreement, which we refer to as the merger proposal. A notice of the special meeting and proxy statement/prospectus follow.

The DigitalGlobe board of directors believes, after considering the reasons described in this proxy statement/prospectus, among other factors, that the merger agreement is advisable and fair to, and in the best interests of DigitalGlobe and its shareowners and approved and declared advisable the merger agreement and the merger. The DigitalGlobe board of directors unanimously recommends that you vote “FOR” each proposal.

Your vote is very important, regardless of the number of shares you own. The merger cannot be completed without DigitalGlobe shareowners approving and adopting the merger agreement. At the special meeting, you will have the opportunity to vote on the approval and adoption of the merger agreement. More information about DigitalGlobe, MDA, the merger agreement, the merger and the special meeting is contained in this proxy statement/prospectus. We encourage you to read this document carefully before voting, including the section entitled “Risk Factors,” beginning on page 33 of the proxy statement/prospectus. Regardless of whether you plan to attend the special meeting, please take the time to vote your shares in accordance with the instructions contained in this document.

The DigitalGlobe board of directors unanimously recommends that DigitalGlobe shareowners vote “FOR” the adoption of the merger agreement.

 

Sincerely,

  

Sincerely,

LOGO    LOGO

Jeffrey R. Tarr

   Howard L. Lance

Director, President and Chief Executive Officer

  

President and Chief Executive Officer

DigitalGlobe, Inc.

  

MacDonald, Dettwiler and Associates Ltd.

NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION, NOR ANY U.S. STATE OR CANADIAN PROVINCIAL OR TERRITORIAL SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED IN CONNECTION WITH THE MERGER OR DETERMINED IF THIS PROXY STATEMENT/PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The securities to be issued in connection with the merger are not savings or deposit accounts and are not insured by the Federal Deposit Insurance Corporation, the Canada Deposit Insurance Corporation or any other governmental agency.

The date of this proxy statement/prospectus is June 22, 2017 and it is first being mailed to DigitalGlobe shareowners on or about June 22, 2017.


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ADDITIONAL INFORMATION

DigitalGlobe files annual, quarterly and other reports, proxy statements and other information with the U.S. Securities and Exchange Commission (which we refer to as the “SEC”). This proxy statement/prospectus incorporates by reference important business and financial information about DigitalGlobe from documents that are not included in or delivered with this proxy statement/prospectus. For a listing of the documents incorporated by reference into this proxy statement/prospectus, see the section entitled “Where You Can Find Additional Information.” You can obtain copies of the documents incorporated by reference into this proxy statement/prospectus, without charge, from the SEC’s website at www.sec.gov or from DigitalGlobe’s website at http://investor.digitalglobe.com under the tab “Financial Information” and then under the heading “SEC Filings.” You may also obtain copies of documents filed by MDA with the Canadian System for Electronic Document Analysis and Retrieval (which we refer to as “SEDAR”), the Canadian equivalent of the SEC’s EDGAR system, at www.sedar.com. You can also request copies of such documents incorporated by reference into this proxy statement/prospectus (excluding all exhibits, unless an exhibit has specifically been incorporated by reference into this proxy statement/prospectus), without charge, by requesting them in writing or by telephone from the appropriate company at the following address and telephone number:

 

DigitalGlobe, Inc.

1300 West 120th Avenue

Westminster, Colorado 80234

Attention: Investor Relations

Telephone: 1-303-684-4000

  

MacDonald, Dettwiler and Associates Ltd.

200 Burrard Street, Suite 1570

Vancouver, British Columbia, Canada V6C 3L6

Attention: Investor Relations

Telephone: 1-604-974-5275

In addition, if you have questions about the merger or the special meeting, need additional copies of this proxy statement/prospectus or need to obtain proxy cards or other information related to the proxy solicitation, you may contact Innisfree M&A Incorporated, DigitalGlobe’s proxy solicitor, at the following address and telephone numbers:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

1-888-750-5834 (toll-free from the U.S. and Canada)

1-412-232-3651 (from other locations)

You will not be charged for any of the documents that you request. If you would like to request documents, please do so by July 20, 2017 (which is five business days before the date of the special meeting) in order to receive them before the special meeting.


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ABOUT THIS PROXY STATEMENT/PROSPECTUS

This proxy statement/prospectus, which forms part of a registration statement on Form F-4 (File No. 333-217512) filed with the SEC by MDA, constitutes a prospectus of MDA under Section 5 of the U.S. Securities Act of 1933, as amended (which we refer to as the “U.S. Securities Act”), with respect to the MDA common shares to be issued to DigitalGlobe shareowners pursuant to the merger agreement.

This proxy statement/prospectus also constitutes a notice of meeting and a proxy statement of DigitalGlobe under Section 14(a) of the U.S. Securities Exchange Act of 1934, as amended (which we refer to as the “U.S. Exchange Act”), with respect to a special meeting at which DigitalGlobe shareowners will be asked to consider and vote on, among other matters, a proposal to approve and adopt the merger agreement.

You should rely only on the information contained in, or incorporated by reference into, this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/prospectus. MDA and DigitalGlobe take no responsibility for, and can provide no assurances as to the reliability of, any other information that others may give you and, if given, such information must not be relied on as having been authorized by MDA or DigitalGlobe. This proxy statement/prospectus is dated June 22, 2017. The information contained in this proxy statement/prospectus is accurate only as of that date or, in the case of information in a document incorporated by reference, as of the date of such document, unless the information specifically indicates that another date applies. Neither the mailing of this proxy statement/prospectus to DigitalGlobe shareowners nor the issuance by MDA of common shares pursuant to the merger agreement will create any implication to the contrary.

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which it is unlawful to make any such offer or solicitation in such jurisdiction.

The information concerning MDA contained in this proxy statement/prospectus has been provided by MDA, and information concerning DigitalGlobe contained in, or incorporated by reference into, this proxy statement/prospectus has been provided by DigitalGlobe.

DigitalGlobe shareowners are encouraged to consult with their own legal, tax, financial or other professional advisors.

Unless otherwise specified, currency amounts referenced in this proxy statement/prospectus are in U.S. dollars, except in the sections entitled “Unaudited Pro Forma Condensed Combined Financial Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of MDA,” and “Additional Information about MDA,” in which currency amounts referenced are in Canadian dollars. References to “$” or “US$” are to U.S. dollars and references to “C$” are to Canadian dollars.


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CURRENCY EXCHANGE RATE DATA

The following table shows, for the periods and dates indicated, certain information regarding the Canadian dollar-to-U.S. dollar exchange rate. The information is based on the Bank of Canada’s closing Canadian dollar-to-U.S. dollar exchange rate. Such exchange rate on June 16, 2017 was C$1.3232 = US$1.00.

 

     Period End      Average(1)      Low      High  

Year ended December 31, (C$ per US$)

           

2016

     1.3427        1.3248        1.2544        1.4589  

2015

     1.3840        1.2787        1.1728        1.3990  

2014

     1.1601        1.1045        1.0614        1.1643  

2013

     1.0636        1.0299        0.9839        1.0697  

2012

     0.9949        0.9996        0.9710        1.0418  

 

     Low      High  

Month ended, (C$ per US$)

     

June 2017(2)

     1.3209        1.3504  

May 2017

     1.3446        1.3743  

April 2017

     1.3275        1.3662  

March 2017

     1.3339        1.3535  

February 2017

     1.3033        1.3297  

January 2017

     1.3078        1.3458  

December 2016

     1.3135        1.3598  

 

(1) The average of the daily exchange rates during the relevant period.
(2) Through June 16, 2017.


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NOTICE OF SPECIAL MEETING OF SHAREOWNERS TO BE HELD ON

JULY 27, 2017

 

 

To the Shareowners of DigitalGlobe, Inc.:

A special meeting (which we refer to as the “special meeting”) of shareowners of DigitalGlobe, Inc., a Delaware corporation (which we refer to as “DigitalGlobe”), will be held at 9:00 a.m., Mountain Time, on July 27, 2017, at DigitalGlobe’s corporate headquarters at 1300 West 120th Avenue, Westminster, Colorado 80234 for the following purposes:

 

  1. to consider and vote on a proposal (which we refer to as the “merger proposal”) to approve and adopt the Agreement and Plan of Merger, dated as of February 24, 2017 (which, as may be amended, we refer to as the “merger agreement”), by and among DigitalGlobe, MacDonald, Dettwiler and Associates Ltd., a corporation organized under the laws of British Columbia (which we refer to as “MDA”), SSL MDA Holdings, Inc., a Delaware corporation and wholly owned subsidiary of MDA (which we refer to as “Holdings”), and Merlin Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Holdings (which we refer to as “Merger Sub”), pursuant to which, among other things, Merger Sub will merge with and into DigitalGlobe (which we refer to as the “merger”), with DigitalGlobe surviving the merger as an indirect wholly owned subsidiary of MDA;

 

  2. to consider and vote on a proposal (which we refer to as the “advisory compensation proposal”) to approve, on an advisory (non-binding) basis, certain specified compensation that will or may be paid by DigitalGlobe to its named executive officers that is based on or otherwise relates to the merger; and

 

  3. to consider and vote upon a proposal to adjourn the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the merger proposal (which we refer to as the “adjournment proposal”).

A copy of the merger agreement is attached as Annex A to the proxy statement/prospectus accompanying this notice. The merger proposal, the advisory compensation proposal, the adjournment proposal and the related transactions are described in detail in the accompanying proxy statement/prospectus, which you should read before you vote. If the merger proposal is not approved by the DigitalGlobe shareowners, the merger will not be completed.

Your vote is very important. To ensure your representation at the special meeting, complete and return the enclosed proxy card or submit your proxy by telephone or the Internet. Please submit a proxy promptly whether or not you expect to attend the special meeting. Submitting a proxy now will not prevent you from revoking the proxy and voting in person at the special meeting. If your shares are held in the name of a bank, broker or other nominee, follow the instructions on the voting instruction card furnished to you by such bank, broker or other nominee.

The DigitalGlobe board of directors has fixed the close of business on June 16, 2017 as the record date for determination of the DigitalGlobe shareowners entitled to vote at the special meeting or any adjournment or postponement thereof. Only DigitalGlobe shareowners of record as of the record date are entitled to notice of, and to vote at, the special meeting or any adjournment or postponement thereof. A complete list of DigitalGlobe shareowners entitled to vote at the special meeting will be available for a period of 10 days prior to the special meeting at the offices of DigitalGlobe, located at 1300 West 120th Avenue, Westminster, Colorado 80234, for inspection by any shareowner, for any purpose germane to the special meeting, during usual business hours. The shareowner list will also be available at the special meeting for examination by any shareowner present at the special meeting. In accordance with the DigitalGlobe bylaws, the special meeting may be adjourned by the DigitalGlobe shareowners entitled to vote at the special meeting.

The DigitalGlobe board of directors unanimously recommends that DigitalGlobe shareowners vote “FOR” the merger proposal, “FOR” the advisory compensation proposal and “FOR” the adjournment proposal.

By Order of the Board of Directors,

LOGO

Jeffrey R. Tarr

Director, President and Chief Executive Officer

Westminster, Colorado


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YOUR VOTE IS VERY IMPORTANT

PLEASE VOTE ON THE ENCLOSED PROXY CARD NOW, EVEN IF YOU PLAN TO ATTEND THE SPECIAL MEETING. YOU CAN VOTE BY SIGNING, DATING AND RETURNING YOUR PROXY CARD BY MAIL IN THE ENCLOSED RETURN ENVELOPE, WHICH REQUIRES NO ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES, OR BY TELEPHONE OR THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE PROXY CARD. IF YOU DO ATTEND THE SPECIAL MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON IF YOU ARE A SHAREOWNER OF RECORD AS OF THE RECORD DATE OR HAVE A LEGAL PROXY FROM A SHAREOWNER OF RECORD AS OF THE RECORD DATE. IF YOU DO NOT SUBMIT YOUR PROXY, INSTRUCT YOUR BROKER HOW TO VOTE YOUR SHARES OR VOTE IN PERSON AT THE SPECIAL MEETING ON THE MERGER PROPOSAL, IT WILL HAVE THE SAME EFFECT AS A VOTE “AGAINST” THE MERGER PROPOSAL.

If your shares are held in “street name” by a bank, broker or other nominee and you wish to vote in person at the special meeting, you must obtain a legal proxy from your bank, broker or other nominee and present it to the inspector of election with your ballot when you vote at the special meeting. Please also bring to the special meeting your account statement evidencing your beneficial ownership of DigitalGlobe common stock and DigitalGlobe preferred stock as of the record date and valid government-issued photo identification. See the section entitled “Questions and Answers About the Merger and the Special Meeting—Who may attend the special meeting?

The accompanying proxy statement/prospectus provides a detailed description of the merger agreement, the merger, the merger proposal and the related agreements and transactions. We urge you to read the accompanying proxy statement/prospectus, including any documents incorporated by reference into the accompanying proxy statement/prospectus, and its annexes carefully and in their entirety. If you have any questions concerning the merger, the merger proposal, the other proposals or the accompanying proxy statement/prospectus, would like additional copies of the accompanying proxy statement/prospectus or need help voting your shares, please contact DigitalGlobe’s proxy solicitor at the address and telephone numbers listed below:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

1-888-750-5834 (toll-free from the U.S. and Canada)

1-412-232-3651 (from other locations)


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TABLE OF CONTENTS

 

FREQUENTLY USED TERMS

     iv  

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

     vii  

SUMMARY

     1  

Information about the Companies

     1  

Risk Factors

     2  

The Merger and the Merger Agreement

     2  

Merger Consideration

     3  

DigitalGlobe Board of Directors’ Recommendation

     3  

Comparative Per Share Market Price Information

     4  

Opinions of DigitalGlobe’s Financial Advisors

     4  

Opinion of PJT Partners

     4  

Opinion of Barclays

     4  

The DigitalGlobe Special Meeting

     5  

Financing for the Merger

     7  

The MDA Meeting and Shareholder Approval

     7  

Listing of MDA Common Shares

     8  

Delisting and Deregistration of DigitalGlobe Common Stock

     8  

Certain U.S. Federal Income Tax Consequences of the Merger

     8  

Certain Canadian Federal Income Tax Considerations of Holding MDA Common Shares

     8  

Accounting Treatment of the Merger

     8  

Treatment of DigitalGlobe Stock Options and Other Equity-Based Awards

     9  

Regulatory Approvals Required for the Merger

     9  

Appraisal or Dissenters’ Rights

     10  

Conditions to the Merger

     11  

No Solicitation

     13  

Termination of the Merger Agreement

     13  

Termination Fees and Expenses

     15  

Your Rights as an MDA Shareholder Will Be Different from Your Rights as a DigitalGlobe Shareowner

     17  

Interests of DigitalGlobe’s Directors and Executive Officers in the Merger

     17  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     20  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF DIGITALGLOBE

     23  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF MDA

     24  

SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

     26  

COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

     29  

UNAUDITED COMPARATIVE PER SHARE DATA

     31  

RISK FACTORS

     33  

Risks Relating to the Merger

     33  

Risks Related to DigitalGlobe’s Business

     43  

Risks Related to MDA’s Business

     44  

Risks Relating to Investing in and Ownership of MDA’s Common Shares

     52  

THE SPECIAL MEETING

     54  

Date, Time and Place of the Special Meeting

     54  

Purpose of the Special Meeting

     54  

Recommendation of the DigitalGlobe Board of Directors

     54  

Record Date and Outstanding Shares of DigitalGlobe Common Stock and DigitalGlobe Preferred Stock

     55  

Quorum

     55  

Required Vote

     56  

Voting by Directors and Executive Officers

     57  

 

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Voting by Proxy or in Person

     57  

Revocability of Proxies and Changes to a DigitalGlobe Shareowner’s Vote

     58  

Abstentions and Broker Non-Votes

     58  

Tabulation of Votes

     59  

Solicitation of Proxies; Expenses of Solicitation

     59  

Householding

     59  

Other Information

     60  

Assistance

     60  

THE MERGER PROPOSAL

     61  

Transaction Structure

     61  

Merger Consideration

     61  

Background of the Merger

     62  

Board of Directors of MDA after the Merger

     77  

MDA’s Reasons for the Merger

     77  

DigitalGlobe’s Reasons for the Merger; Recommendation of the DigitalGlobe Board of Directors

     80  

Opinions of DigitalGlobe’s Financial Advisors

     84  

Certain Unaudited Prospective Financial Information Used by the DigitalGlobe Board of Directors and DigitalGlobe’s Financial Advisors

     105  

Listing of MDA Common Shares

     114  

Delisting and Deregistration of DigitalGlobe Common Stock

     115  

Interests of DigitalGlobe’s Directors and Executive Officers in the Merger

     115  

The MDA Meeting and Shareholder Approval

     124  

Accounting Treatment of the Merger

     124  

Financing for the Merger

     125  

Regulatory Approvals Required for the Merger

     127  

Appraisal or Dissenters’ Rights

     130  

Litigation Relating to the Merger

     135  

Restrictions on Resales of MDA Common Shares Received in the Merger

     137  

Dividend Policy

     137  

Certain U.S. Federal Income Tax Consequences of the Merger

     137  

Consequences of the Merger to Holders of DigitalGlobe Capital Stock

     139  

Ownership and Disposition of MDA Common Shares by U.S. Holders

     141  

Additional Tax on Net Investment Income

     143  

Information Reporting and Backup Withholding

     144  

Certain Canadian Federal Income Tax Considerations of Holding MDA Common Shares

     144  

THE ADVISORY COMPENSATION PROPOSAL

     147  

THE ADJOURNMENT PROPOSAL

     148  

INFORMATION ABOUT THE COMPANIES

     149  

THE MERGER AGREEMENT

     151  

The Merger

     151  

Effects of the Merger on the Governance of MDA, Holdings and the Surviving Corporation

     152  

Merger Consideration

     152  

Surrender of DigitalGlobe Shares

     153  

Treatment of DigitalGlobe Stock Options and Other Equity-Based Awards

     155  

Representations and Warranties

     156  

Material Adverse Effect

     159  

Covenants Regarding Conduct of Business by DigitalGlobe Pending the Merger

     160  

Covenants Regarding Conduct of Business by MDA, Holdings and Merger Sub Pending the Merger

     163  

No Solicitation

     165  

Board Recommendation

     167  

DigitalGlobe Financing Cooperation

     168  

 

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Financing

     170  

MDA’s United States Access Strategy

     170  

Shareholder Meetings

     170  

Employee Benefits

     171  

Indemnification and Insurance

     171  

Regulatory Approvals

     172  

Other Covenants and Agreements

     174  

Conditions That Must Be Satisfied or Waived for the Merger to Occur

     174  

Termination of the Merger Agreement

     177  

Other Remedies

     181  

Modification, Amendment or Waiver

     181  

Governing Law

     181  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     182  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF MDA

     193  

ADDITIONAL INFORMATION ABOUT MDA

     231  

BENEFICIAL OWNERSHIP OF SECURITIES

     267  

Security Ownership of Certain Beneficial Owners and Management of DigitalGlobe

     267  

Security Ownership of Certain Beneficial Owners and Management of MDA

     269  

COMPARISON OF RIGHTS OF MDA SHAREHOLDERS AND DIGITALGLOBE SHAREOWNERS

     271  

LEGAL MATTERS

     297  

EXPERTS

     297  

ENFORCEABILITY OF CIVIL LIABILITIES

     297  

OTHER MATTERS

     298  

FUTURE SHAREOWNER PROPOSALS

     298  

HOUSEHOLDING OF PROXY MATERIALS

     298  

WHERE YOU CAN FIND ADDITIONAL INFORMATION

     300  

Incorporation of Certain Documents by Reference

     300  

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

     F-1  

Annex A    AGREEMENT AND PLAN OF MERGER

     A-1  

Annex B    OPINION OF PJT PARTNERS LP.

     B-1  

Annex C    OPINION OF BARCLAYS CAPITAL INC.

     C-1  

Annex D     SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE

     D-1  

 

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FREQUENTLY USED TERMS

This proxy statement/prospectus generally does not use technical defined terms, but a few frequently used terms may be helpful for you to have in mind at the outset. Unless otherwise specified or if the context so requires, the following terms have the meanings set forth below for purposes of this proxy statement/prospectus:

“Barclays” refers to Barclays Capital Inc.

“cash consideration” refers to the portion of the merger consideration payable in cash, which is US $17.50 in cash without interest per share of DigitalGlobe common stock.

“closing date” refers to the date on which the merger is completed.

“Code” refers to the U.S. Internal Revenue Code of 1986, as amended.

“DGCL” refers to the General Corporation Law of the State of Delaware.

“DigitalGlobe” refers to DigitalGlobe, Inc., a Delaware corporation.

“DigitalGlobe board recommendation” refers to the recommendation of the DigitalGlobe board of directors for the DigitalGlobe shareowners to vote to adopt the merger agreement.

“DigitalGlobe certificate of designation” refers to the Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock of DigitalGlobe.

“DigitalGlobe capital stock” refers to, collectively, the DigitalGlobe common stock and the DigitalGlobe preferred stock.

“DigitalGlobe common stock” refers to DigitalGlobe common stock, par value $0.001 per share.

“DigitalGlobe preferred stock” refers to DigitalGlobe Series A Convertible Preferred Stock, par value $0.001 per share.

“DigitalGlobe shareowners” refers to the holders of DigitalGlobe common stock and DigitalGlobe preferred stock.

“effective time” refers to the time on the closing date at which the merger becomes effective as specified in the certificate of merger of DigitalGlobe and Merger Sub to be filed with the Secretary of State of the State of Delaware.

“end date” refers to December 7, 2017.

“exchange agent” refers to a bank or trust company designated by MDA and reasonably satisfactory to DigitalGlobe.

“Holdings” refers to SSL MDA Holdings, Inc. a Delaware corporation and wholly owned subsidiary of MDA.

“HSR Act” refers to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“IFRS” means generally accepted accounting principles in Canada, including the standards prescribed in Part I of the CPA Canada Handbook – Accounting (International Financing Reporting Standards) as the same may be amended, supplemented or replaced from time to time.

 

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“MDA” refers to MacDonald, Dettwiler and Associates Ltd., a British Columbia corporation.

“MDA board recommendation” refers to the recommendation of the MDA board of directors for the MDA shareholders to vote to approve the MDA common share issuance in connection with the merger.

“MDA common shares” refers to the common shares of MDA, without par value.

“MDA shareholders” refers to the holders of MDA common shares, without par value.

“merger” refers to the proposed merger of Merger Sub with and into DigitalGlobe, pursuant to which DigitalGlobe will survive the merger as an indirect wholly owned subsidiary of MDA.

“merger agreement” refers to the Agreement and Plan of Merger, dated as of February 24, 2017, by and among DigitalGlobe, MDA, Holdings and Merger Sub, as it may be amended.

“merger consideration” refers to the right to receive cash in an amount equal to US $17.50 and 0.3132 of a validly issued, fully paid and non-assessable MDA common share, without interest and subject to any required withholding for taxes, as a result of the conversion in the merger of each issued and outstanding share of DigitalGlobe common stock immediately prior to the effective time (other than any shares held directly or indirectly by MDA, DigitalGlobe or any of their respective subsidiaries or shares of DigitalGlobe common stock owned by holders who properly exercise their appraisal rights under the DGCL).

“Merger Sub” refers to Merlin Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Holdings.

“NGA contract” refers to the Enhanced View Imagery Acquisition Contract No. HM0210-10-C-0002 dated August 6, 2010, by and between DigitalGlobe and the National Geospatial-Intelligence Agency (“NGA”) which was reissued on September 1, 2013 as Contract No. #HM0210-103-C-N002 and as modified.

“O’Melveny” refers to the law firm of O’Melveny & Myers LLP, counsel to DigitalGlobe.

“person” refers to any natural person, firm, individual, partnership, joint venture, business trust, trust, association, corporation, company, unincorporated entity or governmental entity.

“PJT Partners” refers to PJT Partners LP.

“record date” refers to the close of business in New York, New York on June 16, 2017. Only holders of DigitalGlobe common stock and DigitalGlobe preferred stock as of the record date will be entitled to vote at the special meeting and any adjournment or postponement thereof.

“special meeting” refers to the special meeting of DigitalGlobe shareowners to be held on July 27, 2017, as may be postponed or adjourned from time to time.

“Stikeman” refers to Stikeman Elliott LLP, Canadian counsel to MDA.

“stock consideration” refers to the portion of the merger consideration payable in MDA common shares, which is 0.3132 of a validly issued, fully paid and non-assessable MDA common share per share of DigitalGlobe common stock.

“TSX” refers to the Toronto Stock Exchange.

“U.S. GAAP” refers to the generally accepted accounting principles in the United States.

 

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“U.S. Exchange Act” refers to the U.S. Securities Exchange Act of 1934 and, as applicable, the rules and regulations promulgated thereunder, in each case, as amended.

“U.S. Securities Act” refers to the U.S. Securities Act of 1933 and, as applicable, the rules and regulations promulgated thereunder, in each case, as amended.

“Vinson & Elkins” refers to Vinson & Elkins L.L.P., U.S. counsel to MDA.

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

The following questions and answers are intended to address briefly some commonly asked questions regarding the merger and matters to be addressed at the special meeting. These questions and answers may not address all questions that may be important to you. To better understand these matters, and for a description of the legal terms governing the merger, you should carefully read this entire proxy statement/prospectus, including the attached annexes, as well as the documents that have been incorporated by reference into this proxy statement/prospectus. For more information, see the section entitled “Where You Can Find Additional Information.”

 

Q: Why am I receiving this proxy statement/prospectus?

 

A: On February 24, 2017, DigitalGlobe entered into the merger agreement with MDA, Holdings and Merger Sub providing for, among other things, the merger of Merger Sub with and into DigitalGlobe, pursuant to which DigitalGlobe will survive the merger as an indirect wholly owned subsidiary of MDA (which we refer to in such capacity as the “surviving corporation”). You are receiving this proxy statement/prospectus in connection with the solicitation by the DigitalGlobe board of directors of proxies of DigitalGlobe shareowners to consider and vote on the merger proposal, the advisory compensation proposal and the adjournment proposal.

DigitalGlobe is holding a special meeting to obtain the shareowner approval necessary to approve and adopt the merger agreement, among other matters. A copy of the merger agreement is included as Annex A to this proxy statement/prospectus. Among other things, approval of the merger proposal by DigitalGlobe shareowners holding a majority of the voting power of the outstanding shares of DigitalGlobe common stock and DigitalGlobe preferred stock (on an as-converted to DigitalGlobe common stock basis), voting together as a single class, as of the record date for the special meeting is required for the completion of the merger. See the section entitled “The Merger Agreement—Conditions That Must Be Satisfied or Waived For the Merger to Occur” for more information.

DigitalGlobe shareowners are also being asked to consider and vote on a proposal to approve, on an advisory (non-binding) basis, certain specified compensation that will or may be paid by DigitalGlobe to its named executive officers that is based on or otherwise relates to the merger (the “advisory compensation proposal”). DigitalGlobe’s named executive officers are identified under the section entitled “The Merger Proposal—Interests of DigitalGlobe’s Directors and Executive Officers in the Merger.”

In addition, the merger cannot be completed unless MDA shareholders holding a majority of the votes cast on such matter at a meeting of the MDA shareholders duly called and held for such purpose approve the issuance of MDA common shares in connection with the merger, which we refer to as the “MDA common share issuance.” MDA will be holding a combined annual and special meeting of its shareholders (which we refer to as the “MDA meeting”) to vote on the MDA common share issuance. MDA will separately prepare a management information circular in accordance with applicable Canadian securities and corporate laws, which we refer to as the “management information circular,” and distribute such management information circular to its shareholders in connection with the MDA meeting.

This proxy statement/prospectus constitutes both a proxy statement of DigitalGlobe and a prospectus of MDA. It is a proxy statement because the DigitalGlobe board of directors is soliciting proxies from its shareowners. It is a prospectus because MDA will issue to DigitalGlobe shareowners MDA common shares as partial consideration for the exchange of outstanding shares of DigitalGlobe common stock and DigitalGlobe preferred stock in the merger.

Your vote is very important. We encourage you to submit a proxy to have your shares of DigitalGlobe common stock and DigitalGlobe preferred stock voted as soon as possible.

 

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Q: What is the proposed transaction?

 

A: If the merger proposal is approved by DigitalGlobe shareowners and the other conditions to the completion of the merger contained in the merger agreement are satisfied or waived, Merger Sub will merge with and into DigitalGlobe. DigitalGlobe will survive the merger as an indirect wholly owned subsidiary of MDA.

 

Q: What will I receive as a DigitalGlobe shareowner if the merger is completed?

 

A: Under the terms of the merger agreement, if the merger is completed, each share of DigitalGlobe common stock outstanding immediately prior to the effective time (other than shares of DigitalGlobe common stock held directly or indirectly by MDA, DigitalGlobe or any of their respective subsidiaries and except for shares of DigitalGlobe common stock owned by holders who properly exercise their appraisal rights under the DGCL) will automatically be cancelled and converted into the right to receive (a) cash in an amount equal to US $17.50 and (b) 0.3132 of a validly issued, fully paid and non-assessable MDA common share, without interest and subject to any required withholding for taxes, which constitutes the merger consideration.

Each share of DigitalGlobe preferred stock issued and outstanding immediately prior to the effective time (other than shares of DigitalGlobe preferred stock held directly or indirectly by MDA, DigitalGlobe or any of their respective subsidiaries and except for shares of DigitalGlobe preferred stock owned by holders who properly exercise their appraisal rights under the DGCL) will be converted into the right to receive the merger consideration that the holder of such DigitalGlobe preferred stock would have been entitled to receive had such holder, immediately prior to the effective time, converted such DigitalGlobe preferred stock into DigitalGlobe common stock in accordance with the DigitalGlobe certificate of designation.

No certificates for fractional MDA common shares or book-entry credit will be delivered for the exchange of DigitalGlobe stock certificates, and such DigitalGlobe fractional share interests will not entitle the DigitalGlobe shareowner to vote or to have any rights as a holder of any MDA common shares. Each holder of shares of DigitalGlobe common stock or DigitalGlobe preferred stock exchanged pursuant to the merger who would otherwise have been entitled to receive a fraction of an MDA common share (after taking into account all certificates or book-entry credits delivered by such DigitalGlobe shareowner) will receive, in lieu thereof, cash (without interest) in an amount equal to the product of (a) the average of the closing sale prices of MDA common shares on the TSX as reported by The Wall Street Journal for the five trading days immediately preceding the date on which the effective time will occur, converted from Canadian dollars to U.S. dollars using the Bank of Canada’s daily average Canadian dollar-to-U.S. dollar exchange rate for each such trading day, and (b) the fraction of an MDA common share which such DigitalGlobe shareowner would otherwise be entitled to receive pursuant to the stock conversion process discussed above.

Based on the closing price of MDA common shares of C$73.40 on the TSX on February 16, 2017, the last full trading day prior to media reports that DigitalGlobe and MDA were in merger discussions, the per share value of DigitalGlobe common stock implied by the merger consideration was $35.00 (converted to U.S. dollars using a Canadian dollar-to-U.S. dollar exchange rate of 0.7612). The implied value of the merger consideration will fluctuate, however, as the market price of MDA common shares fluctuates, because the stock consideration that is payable per share of DigitalGlobe common stock is a fixed fraction of an MDA common share. As a result, the value of the stock consideration that DigitalGlobe shareowners will receive upon the completion of the merger could be greater than, less than or the same as the value of the stock consideration on the date of this proxy statement/prospectus or at the time of the special meeting. Accordingly, you are encouraged to obtain current stock price quotations for DigitalGlobe common stock and MDA common shares before deciding how to vote with respect to the merger proposal. DigitalGlobe common stock trades on the NYSE under the ticker symbol “DGI” and MDA common shares trade on the TSX under the ticker symbol “MDA.” The price of DigitalGlobe common stock on the NYSE is reported in U.S. dollars, while the price of MDA common shares on the TSX is reported in Canadian dollars.

 

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Q: When will I receive the merger consideration to which I am entitled?

 

A: After the merger is completed, when you properly follow the instructions and complete and return the letter of transmittal, you will receive the merger consideration. More information may be found under the section entitled “The Merger Agreement—Surrender of DigitalGlobe Shares.

 

Q: If I hold outstanding DigitalGlobe equity awards, what will I receive in the merger in exchange for my equity awards?

 

A: Options. At the effective time, each of your options to purchase DigitalGlobe common stock that has been granted or assumed by DigitalGlobe and is outstanding and unexercised immediately prior to the effective time, whether vested or unvested, will be cancelled in exchange for the right to receive a combination of cash and a number of MDA common shares, each of which will be calculated as described in the section entitled “The Merger Proposal—Interests of DigitalGlobes Directors and Executive Officers in the Merger—Treatment of DigitalGlobe Equity Awards” below. Such payments will be made on the date of the closing of the merger.

Performance-Based RSUs and Vested RSUs. At the effective time, each of your outstanding restricted stock units granted by DigitalGlobe that remains subject to one or more unsatisfied performance conditions for a performance period that includes the date on which the effective time occurs, as well as each of your outstanding DigitalGlobe restricted stock units that is then vested, will be cancelled in exchange for the right to receive a combination of cash and a number of MDA common shares, each of which will be calculated as described in the section entitled “The Merger Proposal—Interests of DigitalGlobe’s Directors and Executive Officers in the Merger—Treatment of DigitalGlobe Equity Awards” below. The number of shares of DigitalGlobe common stock subject to such a performance-based RSU will be the applicable “target” level, except that, as to any such performance condition based on a relative total stockholder return measure, the number of shares subject to the award will be determined as though the applicable performance period ended with the trading day immediately preceding the date on which the effective time occurs and performance will be measured as described in the section entitled “The Merger Proposal—Interests of DigitalGlobe’s Directors and Executive Officers in the Merger—Treatment of DigitalGlobe Equity Awards” below.

Unvested Time-Based RSUs. At the effective time, each of your outstanding restricted stock units granted by DigitalGlobe that remains unvested (and is not a performance-based restricted stock unit as described above) will be assumed by MDA and converted into the right to receive a combination of cash and a number of MDA common shares, each of which will be calculated as described in the section entitled “The Merger Proposal—Interests of DigitalGlobe’s Directors and Executive Officers in the Merger—Treatment of DigitalGlobe Equity Awards” below. The cash portion of such consideration will be vested at the effective time and paid on the date of the closing of the merger, but the stock portion of such consideration will be subject to continued vesting requirements on the same vesting schedule as was applicable to your unvested DigitalGlobe restricted stock units.

You can find a more detailed description of the treatment of DigitalGlobe equity awards in the section entitled “The Merger Agreement—Treatment of DigitalGlobe Stock Options and Other Equity-Based Awards.”

 

Q: When and where is the special meeting?

 

A: The special meeting of DigitalGlobe shareowners will be held at 9:00 am, Mountain Time, on July 27, 2017, at DigitalGlobe’s corporate headquarters located at 1300 West 120th Avenue, Westminster, Colorado 80234.

 

Q: Who is entitled to vote at the special meeting?

 

A:

Only holders of DigitalGlobe common stock and DigitalGlobe preferred stock, in each case, as of the record date, as of the close of business on June 16, 2017, are entitled to notice of, and to vote at, the special

 

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  meeting and any adjournment or postponement thereof. As of the record date, there were 62,219,652 shares of DigitalGlobe common stock and 80,000 shares of DigitalGlobe preferred stock outstanding. Each outstanding share of DigitalGlobe common stock is entitled to one vote on each matter coming before the DigitalGlobe shareowners at the special meeting. Each outstanding share of DigitalGlobe preferred stock is entitled to the whole number of votes equal to the number of shares of DigitalGlobe common stock into which such holder’s DigitalGlobe preferred stock would be convertible into on the record date for the special meeting.

 

Q: Who may attend the special meeting?

 

A: If you are a DigitalGlobe shareowner of record as of the record date, you may attend the special meeting and vote in person the shares you hold directly in your name. If you choose to do that, you must present valid government-issued photo identification such as a driver’s license or passport. If you want to vote in person at the special meeting and you hold DigitalGlobe common stock or DigitalGlobe preferred stock in “street name” through a bank, broker or other nominee, you must present valid government-issued photo identification such as a driver’s license or passport and a power of attorney or other proxy authority from your broker, bank or other nominee and present it to the inspector of election with your ballot when you vote at the special meeting. Please also bring to the special meeting your account statement evidencing your beneficial ownership of DigitalGlobe common stock or DigitalGlobe preferred stock as of the record date. Follow the instructions from your bank, broker or other nominee, or contact your bank, broker or other nominee to request a power of attorney or other proxy authority. If you vote in person at the special meeting, you will revoke any prior proxy you may have submitted.

 

Q: What am I being asked to vote on?

 

A: You are being asked to vote on the following proposals:

Merger Proposal: to approve and adopt the merger agreement, pursuant to which Merger Sub will merge with and into DigitalGlobe. DigitalGlobe will survive the merger as an indirect wholly owned subsidiary of MDA.

Advisory Compensation Proposal: to approve, on an advisory (non-binding) basis, certain specified compensation that will or may be paid by DigitalGlobe to its named executive officers that is based on or otherwise relates to the merger.

Adjournment Proposal: to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve and adopt the merger agreement.

The approval of the merger proposal is a condition to the obligations of DigitalGlobe and MDA to complete the merger. The approval of the advisory compensation proposal and the adjournment proposal are not conditions to the obligations of DigitalGlobe or MDA to complete the merger and are not binding on DigitalGlobe or MDA following the merger. No other matters are intended to be brought before the special meeting by DigitalGlobe.

 

Q: What vote is required to approve each proposal?

 

A: The approval of the merger proposal requires the affirmative vote of the holders of a majority in voting power of the outstanding shares of DigitalGlobe common stock and DigitalGlobe preferred stock (on an as-converted to DigitalGlobe common stock basis), voting together as a single class, as of the record date.

The approval of the advisory compensation proposal and the adjournment proposal requires the affirmative vote of holders of a majority of the shares of DigitalGlobe common stock and DigitalGlobe preferred stock (on an as-converted to DigitalGlobe common stock basis), voting together as a single class, that are present at the special meeting in person or by proxy and entitled to vote on such proposal.

 

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Q: What constitutes a quorum?

 

A: A quorum is the number of shares that must be present, in person or by proxy, in order for business to be transacted at a shareowner meeting of DigitalGlobe. The required quorum for the special meeting is a majority of DigitalGlobe’s common stock and DigitalGlobe preferred stock issued and outstanding and entitled to vote as of the record date, with DigitalGlobe preferred stock represented on an as-converted to DigitalGlobe common stock basis. All shares represented at the special meeting in person or by proxy (including proxies submitted by telephone or the Internet) will be counted toward the quorum. Abstentions will be deemed present and entitled to vote at the special meeting for the purpose of determining the presence of a quorum. DigitalGlobe common stock and DigitalGlobe preferred stock held by a shareowner that does not attend the special meeting or fails to submit a valid proxy to vote their shares at the special meeting and DigitalGlobe common stock and DigitalGlobe preferred stock held in “street name” with respect to which the beneficial owner otherwise fails to give voting instructions with respect to their shares will not be considered present and entitled to vote at the special meeting for the purpose of determining the presence of a quorum.

 

Q: How does the DigitalGlobe board of directors recommend that I vote?

 

A: The DigitalGlobe board of directors determined that the merger agreement is advisable and fair to, and in the best interests of, DigitalGlobe and its shareowners, has unanimously approved and declared advisable the merger agreement and the transactions contemplated thereby, including the merger, and recommended adoption of the merger agreement by the DigitalGlobe shareowners.

Accordingly, the DigitalGlobe board of directors unanimously recommends that you vote:

FOR” the merger proposal;

FOR” the advisory compensation proposal; and

FOR” the adjournment proposal.

For a discussion of each proposal, see the sections entitled “The Merger Proposal—DigitalGlobe’s Reasons for the Merger; Recommendation of the DigitalGlobe Board of Directors,” “The Advisory Compensation Proposal,” and “The Adjournment Proposal.”

 

Q: Why did the DigitalGlobe board of directors approve the merger agreement and the transactions contemplated thereby?

 

A: To review the DigitalGlobe board of directors’ reasons for (a) determining that the merger agreement and the transactions contemplated thereby are advisable and are fair to, and in the best interests of, DigitalGlobe and its shareowners, (b) approving the merger agreement and the transactions contemplated thereby and (c) recommending adoption of the merger agreement by the DigitalGlobe shareowners, see the section entitled “The Merger Proposal—DigitalGlobe’s Reasons for the Merger; Recommendation of the DigitalGlobe Board of Directors.”

 

Q: How do I vote my shares?

 

A: If you are a DigitalGlobe shareowner of record as of the record date, you may vote your shares, or authorize a proxy to vote your shares, by:

 

  (1) Internet, by going to the website site shown on your proxy card and following the instructions outlined on the secured website to submit a proxy using certain information provided on your proxy card, thereby authorizing a proxy to vote your shares.

 

  (2) Telephone, by using the toll-free number shown on your proxy card, or by following the instructions on your proxy card to submit a proxy, thereby authorizing a proxy to vote your shares.

 

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  (3) By Mail, if you received your proxy materials by mail, you may submit your written proxy by completing the proxy card enclosed with those materials and signing, dating and returning your proxy card by mail in the enclosed return envelope, which requires no additional postage if mailed in the United States, thereby authorizing a proxy to vote your shares.

 

  (4) In Person, by attending the special meeting and voting.

If your shares of DigitalGlobe common stock or DigitalGlobe preferred stock are held in “street name” by a bank, broker or other nominee, you should have received a voting instruction form from your bank, broker or other nominee and you should follow the instructions given by that institution to direct how your shares are to be voted at the special meeting. If you are a “street name” owner and have a legal proxy from the shareowner of record as of the record date, you may vote in person at the special meeting.

 

Q: What is a proxy?

 

A: A proxy is your legal designation of another person, referred to as a “proxy,” to vote your shares of DigitalGlobe common stock and DigitalGlobe preferred stock. The written document describing the matters to be considered and voted on at the special meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares of DigitalGlobe common stock and DigitalGlobe preferred stock is called a “proxy card.”

 

Q: How do proxies work?

 

A: The DigitalGlobe board of directors is asking for your proxy. Giving DigitalGlobe your proxy means that you authorize the proxy holders named on the proxy card to vote your shares at the special meeting in the manner you direct. You may vote for all, some or none of the proposals. However, a failure to vote on the merger proposal or an abstention on the merger proposal will have the same effect as a vote against the merger proposal. You may also vote for or against the other items or abstain from voting on them. If you sign, date and return the enclosed proxy card but do not specify how to vote, DigitalGlobe will vote your shares “FOR” the merger proposal, “FOR” the advisory compensation proposal and “FOR” the adjournment proposal.

 

Q: If I am not going to attend the special meeting, should I return my proxy card or otherwise vote my shares?

 

A: Yes. Completing, signing, dating and returning the proxy card by mail or submitting a proxy by calling the toll-free number shown on the proxy card or submitting a proxy by visiting the website shown on the proxy card ensures that your shares will be represented and voted at the special meeting, even if you otherwise do not attend.

 

Q: If my DigitalGlobe common stock or DigitalGlobe preferred stock is represented by physical stock certificates, should I send my stock certificates now?

 

A: No. After the merger is completed, you will receive a transmittal form with instructions for the surrender of your DigitalGlobe common stock and DigitalGlobe preferred stock certificates. Please do not send your stock certificates with your proxy card.

 

Q: If my shares are held in “street name” by my bank, broker or other nominee, will the bank, broker or other nominee vote my shares for me?

 

A:

No. If you hold your shares of DigitalGlobe common stock or DigitalGlobe preferred stock in “street name,” which means your shares are held of record by a bank, broker or other nominee, you must provide instructions to your bank, broker or nominee to direct how your shares are voted at the special meeting.

 

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  Please follow the instructions provided by your bank, broker or other nominee regarding the voting of your shares of DigitalGlobe common stock and/or DigitalGlobe preferred stock. Unless your bank, broker or other nominee has discretionary authority to vote your shares, your bank, broker or other nominee may not vote your shares without voting instructions from you. In accordance with the rules of the NYSE, brokers who hold DigitalGlobe common stock or DigitalGlobe preferred stock in street name for their customers have authority to vote on “routine” proposals when they have not received instructions from beneficial owners, but are precluded from exercising their voting discretion with respect to non-routine matters. All of the proposals at the special meeting (i.e., the merger proposal, the advisory compensation proposal and the adjournment proposal) are expected to be considered non-routine proposals. As a result, absent voting instructions from the beneficial owner of such shares, brokers will not be empowered to vote such shares at the special meeting and we do not expect broker non-votes on any of the proposals at the special meeting. A broker non-vote occurs on an item when (i) a broker has discretionary authority to vote on at least one routine proposal at a meeting, but under stock exchange rules is not permitted to vote on other non-routine proposals without instructions from the beneficial owner of the shares and (ii) that broker exercises its discretionary authority on the routine proposal after the beneficial owner fails to provide such instructions, resulting in broker non-votes on each of the non-routine proposals.

If you fail to instruct your bank, broker or other nominee how to vote your shares, that failure will have the same effect as a vote “AGAINST” the merger proposal, but will have no effect on the advisory compensation proposal or the adjournment proposal, assuming a quorum is present.

 

Q: Can I change my vote?

 

A: Yes. If you are a DigitalGlobe shareowner of record as of the record date and have properly completed and submitted your proxy card or proxy by telephone or the Internet, you can change your vote in any of the following ways:

 

    Sending a written notice prior to your shares being voted at the special meeting (bearing a date later than the date of the proxy) stating that you revoke your proxy to DigitalGlobe at 1300 West 120th Avenue, Westminster, Colorado 80234, Attn: Corporate Secretary;

 

    Submitting a valid, later-dated proxy by mail, telephone or the Internet prior to your shares being voted at the special meeting; or

 

    Attending the special meeting and voting your shares by ballot in person. Please note that simply attending the special meeting will not revoke a proxy.

If you choose to submit a later-dated proxy by telephone or the Internet to change your vote, you must do so by 11:59 pm on July 26, 2017.

If your shares are held in “street name” by your bank, broker or other nominee and you have directed such bank, broker or other nominee to vote your shares, you should instruct such bank, broker or other nominee to change your vote and follow the directions you receive from your bank, broker or other nominee in order to change or revoke your vote.

 

Q: What if I do not vote?

 

A: If you fail to submit a valid proxy, fail to vote your shares in person at the special meeting, abstain from voting or fail to instruct your broker, bank or other nominee how to vote, that failure will have the same effect as a vote “AGAINST” the merger proposal.

If your shares are present at the special meeting but are not voted, or if you abstain from voting, on the advisory compensation proposal or the adjournment proposal, it will have the same effect as a vote “AGAINST” the advisory compensation proposal and “AGAINST” the adjournment proposal, as applicable. If you fail to submit a valid proxy or fail to instruct your bank, broker or other nominee how to vote your shares, your shares will not be counted in determining the outcome of the advisory compensation proposal or the adjournment proposal, assuming a quorum is present.

 

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If you submit a valid proxy card but do not indicate how you want to vote on a particular proposal, your proxy will be counted as a vote “FOR” that proposal in accordance with the recommendation of the DigitalGlobe board of directors.

 

Q: What should I do now?

 

A: After carefully reading and considering the information contained in this proxy statement/prospectus, you should submit a proxy by mail, by telephone or by the Internet to vote your shares as soon as possible so that your shares will be represented and voted at the special meeting. You should follow the instructions set forth on the enclosed proxy card or on the voting instruction form provided by the record holder if your shares are held in the name of a bank, broker or other nominee.

 

Q: Is my vote important?

 

A: Yes. Your vote is very important. The merger cannot be completed without the approval of the merger proposal by DigitalGlobe shareowners. The approval of the merger proposal requires the affirmative vote of the holders of a majority in voting power of the outstanding shares of DigitalGlobe common stock and DigitalGlobe preferred stock (on an as-converted to DigitalGlobe common stock basis), voting together as a single class, as of the record date. The DigitalGlobe board of directors unanimously recommends that you vote “FOR” the merger proposal.

 

Q: What happens if I transfer or sell my shares of DigitalGlobe common stock and/or DigitalGlobe preferred stock before the special meeting or before completion of the merger?

 

A: The record date is earlier than the date of the special meeting and the date that the merger is expected to be completed. If you transfer or sell your shares of DigitalGlobe common stock and/or DigitalGlobe preferred stock after the record date but before the special meeting, unless you provide the transferee of your shares with a proxy, you will retain your right to vote at the special meeting. However, if you are a DigitalGlobe shareowner, you will have transferred the right to receive the merger consideration in the merger. In order to receive the merger consideration, you must hold your shares of DigitalGlobe common stock and DigitalGlobe preferred stock through the effective time.

 

Q: Where can I find the voting results of the special meeting?

 

A: DigitalGlobe intends to announce the preliminary voting results at the special meeting. In addition, within four business days following certification of the final voting results, DigitalGlobe intends to file the final voting results with the SEC on a Current Report on Form 8-K.

 

Q: What will happen if the merger proposal is not approved?

 

A: As a condition to the completion of the merger, among others, DigitalGlobe shareowners holding a majority in voting power of the outstanding shares of DigitalGlobe common stock and DigitalGlobe preferred stock (on an as-converted to DigitalGlobe common stock basis), voting together as a single class, must approve the merger proposal. If the merger proposal is not approved by such requisite DigitalGlobe shareowners, the merger will not be completed and, if the merger agreement is terminated by DigitalGlobe or Holdings pursuant to the failure to obtain DigitalGlobe shareowner approval termination right in the merger agreement, DigitalGlobe will be required to reimburse MDA for its reasonable out-of-pocket expenses incurred in connection with the merger agreement, subject to a maximum amount of $10 million. The completion of the merger is not conditioned or dependent upon the approval of the advisory compensation proposal or the adjournment proposal.

 

Q: Why am I being asked to approve, on an advisory (non-binding) basis, the advisory compensation proposal?

 

A:

The SEC has adopted rules that require DigitalGlobe to seek an advisory (non-binding) vote on certain specified compensation that will or may be paid by DigitalGlobe to its named executive officers that is

 

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  based on or otherwise relates to the merger. DigitalGlobe urges the DigitalGlobe shareowners to read the section entitled “The Merger Proposal—Interests of DigitalGlobe’s Directors and Executive Officers in the Merger” for more information.

 

Q: What happens if the advisory compensation proposal is not approved?

 

A: This vote is advisory and non-binding, and the merger is not conditioned or dependent upon the approval of the advisory compensation proposal. Therefore, the vote is non-binding on DigitalGlobe, the DigitalGlobe board of directors, the compensation committee of the DigitalGlobe board of directors, MDA, the MDA board of directors and the compensation committee of the MDA board of directors.

 

Q: How will DigitalGlobe’s directors and executive officers vote on the merger proposal?

 

A: It is expected that the DigitalGlobe directors and executive officers who are DigitalGlobe shareowners will vote “FOR” the merger proposal, “FOR” the advisory compensation proposal and “FOR” the adjournment proposal, although none of them has entered into any agreement requiring them to do so.

As of the record date for the special meeting, the directors and executive officers of DigitalGlobe owned, in the aggregate, approximately 774,326 shares of DigitalGlobe common stock, representing approximately 1.2% of the shares of DigitalGlobe common stock and DigitalGlobe preferred stock then outstanding and entitled to vote at the special meeting. As of the record date for the special meeting, no DigitalGlobe director or executive officers owns any shares of DigitalGlobe preferred stock. As of the record date, the directors and executive officers of MDA owned, in the aggregate, approximately 1,000 shares of DigitalGlobe common stock, representing less than 0.01% of the shares of DigitalGlobe common stock and DigitalGlobe preferred stock then outstanding and entitled to vote at the special meeting. As of the record date for the special meeting, no MDA director or executive officer owns any shares of DigitalGlobe preferred stock.

 

Q: Do any of DigitalGlobe’s directors or executive officers have interests in the merger that may differ from or be in addition to my interests as a shareowner?

 

A: Yes. In considering the recommendation of the DigitalGlobe board of directors with respect to the merger proposal, you should be aware that DigitalGlobe’s directors and executive officers have interests in the merger that are different from, or in addition to, the interests of DigitalGlobe shareowners generally. These interests may include, among others, potential severance benefits, the treatment of outstanding equity awards pursuant to the merger agreement, rights to ongoing indemnification and insurance coverage, and certain rights to appointment to directorships in MDA and Holdings. The DigitalGlobe board of directors was aware of those interests and considered them, among other matters, in determining that the merger agreement and the transactions contemplated thereby are advisable and are fair to, and in the best interests of, the DigitalGlobe shareowners, approving the merger agreement and the transactions contemplated thereby, including the merger, and recommending adoption of the merger agreement by the DigitalGlobe shareowners. For a discussion of DigitalGlobe’s directors’ or executive officers’ interests in the merger that may differ from or be in addition to your interests as a shareowner, see the section entitled “The Merger Proposal—Interests of DigitalGlobe’s Directors and Executive Officers in the Merger.”

 

Q: Is the obligation of each of DigitalGlobe and MDA to complete the merger subject to any conditions?

 

A:

Yes. Completion of the merger is subject to the satisfaction or waiver of a number of conditions as set forth in the merger agreement, including, among others, (a) the approval and adoption of the merger agreement by DigitalGlobe shareowners holding a majority in voting power of the outstanding shares of DigitalGlobe common stock and DigitalGlobe preferred stock (on an as-converted to DigitalGlobe common stock basis), voting together as a single class, and entitled to vote at the special meeting; (b) the approval of the issuance of MDA common shares in connection with the merger by a majority of the votes cast on such matter at the

 

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  MDA meeting; (c) expiration or termination of the applicable waiting period under the HSR Act; (d) receipt of an approval from the Committee on Foreign Investment in the United States (which we refer to as “CFIUS”); (e) receipt of other regulatory approvals; (f) the absence of any law or action taken by any governmental entity of competent jurisdiction (whether temporary, preliminary or permanent) which restrains, precludes, enjoins or otherwise prohibits the consummation of the merger or makes the merger illegal; (g) the U.S. Securities and Exchange Commission (the “SEC”) declaring effective the registration statement on Form F-4 under the U.S. Securities Act of which this proxy statement/prospectus is a part; (h) the conditional approval or authorization, as applicable, for listing on the TSX and either the NYSE or NASDAQ of the MDA common shares issuable in connection with the merger; (i) receipt by each of MDA and DigitalGlobe of a tax opinion from an outside tax advisor or legal counsel regarding certain aspects of the transaction; (j) the accuracy of the representations and warranties contained in the merger agreement (subject to specified materiality qualifiers); (k) compliance with the covenants and agreements in the merger agreement in all material respects; and (l) no material adverse effect on either DigitalGlobe or MDA having occurred.

For a more detailed discussion of the conditions to the completion of the merger, see the section entitled “The Merger Agreement—Conditions that Must Be Satisfied or Waived for the Merger to Occur.”

 

Q: Is DigitalGlobe prohibited from soliciting other offers?

 

A: The merger agreement generally restricts DigitalGlobe’s and MDA’s ability to: (a) initiate, solicit, knowingly facilitate or knowingly encourage any inquiries, proposals or offers with respect to, or the making of, any proposal or offer that constitutes or could reasonably be expected to lead to, an acquisition proposal (as defined in the section entitled “The Merger Agreement—No Solicitation”); (b) enter into, participate or engage in, or continue, any discussions or negotiations with respect to any acquisition proposal, or any inquiry or indication of interest that could reasonably be expected to lead to an acquisition proposal; (c) furnish or provide any non-public information regarding it or its subsidiaries to any person, or provide access to any person to the properties, assets or employees of it or its subsidiaries in connection with or in response to any acquisition proposal or any inquiry or indication of interest that could reasonably be expected to lead to an acquisition proposal; (d) approve or recommend to the DigitalGlobe shareowners or MDA shareholders, as applicable, any acquisition proposal; or (e) approve or recommend to the DigitalGlobe shareowners or MDA shareholders, as applicable, or execute or enter into, any letter of intent or agreement in principal, or any other contract contemplating or otherwise relating to an acquisition proposal (other than an acceptable confidentiality agreement as provided for in the merger agreement). However, under certain circumstances, DigitalGlobe and MDA are permitted to take certain actions regarding bona fide written acquisition proposals that did not result from a violation of such restrictions. For further information, see the section entitled “The Merger Agreement—No Solicitation.”

 

Q: Will the MDA common shares to be issued to me at the completion of the merger be traded on an exchange?

 

A: Yes. It is a condition to the completion of the merger that the MDA common shares to be issued to DigitalGlobe shareowners in connection with the merger be conditionally approved for listing on the TSX, subject only to the provision of such required documentation as is customary in the circumstances, and also be authorized for listing on the NYSE or NASDAQ, subject to official notice of issuance. Therefore, if the merger is completed, MDA expects that as of the effective time, all MDA common shares received by DigitalGlobe shareowners in connection with the merger will be listed on the TSX and either the NYSE or NASDAQ and may be traded by shareholders on either exchange.

MDA will apply to list the MDA common shares to be issued to the DigitalGlobe shareowners on (a) either the NYSE or NASDAQ and (b) the TSX, but such listing is subject to MDA fulfilling all of the listing requirements of each of the NYSE or NASDAQ, as applicable, and the TSX. The TSX has conditionally approved the listing of the MDA common shares to be issued pursuant to the merger, subject to the approval by MDA shareholders of such issuance of MDA common shares, as discussed in the section entitled “The Merger Proposal–The MDA Meeting and Shareholder Approval,” and filing certain documents following

 

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the closing of the merger. Additionally, there can be no assurance that such MDA common shares will be accepted for listing on the NYSE or NASDAQ, as applicable, or the TSX. For more information regarding the listing of the MDA common shares to be issued to DigitalGlobe shareowners in connection with the merger, see the section entitled “The Merger Proposal—Listing of MDA Common Shares.”

MDA common shares received by DigitalGlobe shareowners in connection with the merger will be freely transferable except for shares issued to any shareowner deemed to be an “affiliate” of MDA for purposes of U.S. federal securities law. For more information, see the section entitled “The Merger Proposal—Restrictions on Resales of MDA Common Shares Received in the Merger.”

 

Q: After the merger, how much of MDA will the DigitalGlobe shareowners own?

 

A: Based on the number of shares of DigitalGlobe capital stock outstanding as of June 16, 2017, and the number of MDA common shares outstanding as of June 16, 2017, it is expected that, immediately after completion of the merger, the former DigitalGlobe shareowners will receive MDA common shares in the merger representing approximately 37.1% of the then outstanding MDA common shares (assuming the issuance of the 600,556 MDA common shares expected to be reserved for issuance in respect of certain DigitalGlobe restricted stock units).

 

Q: Do you expect the merger to be taxable to me?

 

A: The exchange of shares of DigitalGlobe common stock for the merger consideration, and the conversion of DigitalGlobe preferred stock into the right to receive the merger consideration that the holder thereof would have been entitled to receive had such holder, immediately prior to the effective time, converted such DigitalGlobe preferred stock into DigitalGlobe common stock, will be a taxable transaction for U.S. federal income tax purposes and may also be taxable under state, local and/or other tax laws. You should read the sections entitled “The Merger Proposal – Certain U.S. Federal Income Tax Consequences of the Merger” and “The Merger Proposal – Certain Canadian Federal Income Tax Considerations of Holding MDA Common Shares” and consult your tax advisors regarding the U.S. federal income tax consequences of the merger to you in your particular circumstances, as well as tax consequences arising under the laws of any state, local and/or other tax laws.

 

Q: Are there risks associated with the merger?

 

A: Yes. There are important risks involved both in connection with the merger and in connection with an investment in MDA. Before making any decision on whether and how to vote, you are urged to read carefully and in its entirety the section entitled “Risk Factors.”

 

Q: Do I have appraisal or dissenters’ rights for my DigitalGlobe common stock and DigitalGlobe preferred stock in connection with the merger?

 

A: If the merger is completed, DigitalGlobe shareowners who do not vote in favor of the approval and adoption of the merger agreement and who properly demand appraisal of their shares will be entitled to appraisal rights in connection with the merger under Section 262 of the DGCL. This means that holders of shares of DigitalGlobe common stock and DigitalGlobe preferred stock are entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of the shares of common stock and preferred stock, exclusive of any elements of value arising from the accomplishment or expectation of the merger, together with interest on the amount determined to be fair value, if any, as determined by the court (or in certain circumstances described in this proxy statement/prospectus, on the difference between the amount determined to be the fair value and the amount paid by DigitalGlobe in the merger to each shareowner entitled to appraisal prior to the entry of judgment in the appraisal proceedings). Shareowners who wish to seek appraisal of their shares are in any case encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights due to the complexity of the appraisal process. The DGCL requirements for exercising appraisal rights are described in additional detail in this proxy statement/prospectus, and Section 262 of the DGCL regarding appraisal rights is reproduced in Annex D to this proxy statement. See the section entitled “The Merger Proposal—Appraisal or Dissenters’ Rights” for more information.

 

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Q: When will the merger be completed?

 

A: DigitalGlobe and MDA are working to complete the merger as quickly as possible. In addition to regulatory approvals, and assuming that the merger proposal is approved by DigitalGlobe shareowners holding a majority in voting power of the outstanding shares of DigitalGlobe common stock and DigitalGlobe preferred stock (on an as-converted to DigitalGlobe common stock basis), voting together as a single class, as of the record date, other important conditions to the completion of the merger exist. Assuming the satisfaction of all necessary conditions, DigitalGlobe and MDA expect to complete the merger in the second half of 2017. The merger agreement contains an end date and time of 5:00 p.m. Eastern Time on December 7, 2017 for the completion of the merger. For a discussion of the conditions to the completion of the merger, see the sections entitled “The Merger Proposal—Regulatory Approvals Required for the Merger” and “The Merger Agreement—Conditions that Must Be Satisfied or Waived for the Merger to Occur.”

 

Q: What happens if the merger is not completed?

 

A: If the merger is not completed for any reason, you will not receive any consideration for your DigitalGlobe common stock and/or DigitalGlobe preferred stock, and DigitalGlobe will remain an independent public company with DigitalGlobe common stock continuing to be traded on the NYSE.

 

Q: Who will solicit and pay the cost of soliciting proxies?

 

A: DigitalGlobe will bear all costs and expenses in connection with the solicitation of proxies from its shareowners. In addition to the solicitation of proxies by mail, DigitalGlobe will request that banks, brokers and other record holders send proxies and proxy material to the beneficial owners of DigitalGlobe common stock and DigitalGlobe preferred stock and secure their voting instructions, if necessary. DigitalGlobe will reimburse the banks, brokers and other record holders for their reasonable expenses in taking those actions. DigitalGlobe has also made arrangements with Innisfree M&A Incorporated to assist in soliciting proxies and in communicating with DigitalGlobe shareowners and estimates that it will pay Innisfree M&A Incorporated a fee of approximately $25,000 plus reasonable out-of-pocket costs and expenses for these services. Proxies may also be solicited by DigitalGlobe’s directors, officers and other employees through the mail or by telephone, the Internet, fax or other means, but no additional compensation will be paid to these persons.

 

Q: What if I receive more than one set of voting materials?

 

A: You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus, the proxy card or the voting instruction form. This can occur if you hold your shares in more than one brokerage account, if you hold shares directly as a holder of record and also in “street name,” or otherwise through another holder of record, and in certain other circumstances. If you receive more than one set of voting materials, please vote or return each set separately in order to ensure that all of your shares are voted.

 

Q: What is “householding”?

 

A:

The SEC has adopted a rule concerning the delivery of annual reports and proxy statements. It permits DigitalGlobe to send a single notice of meeting and, to the extent requested, a single set of this proxy statement/prospectus to any household at which two or more shareowners reside if DigitalGlobe believes they are members of the same family, until such time as DigitalGlobe receives contrary instructions. This rule is called “householding,” and its purpose is to help reduce printing and mailing costs of proxy materials. A number of brokerage firms have instituted householding. If you and members of your household have multiple accounts holding DigitalGlobe common stock and/or DigitalGlobe preferred stock,

 

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  you may have received a householding notification from your broker. Please contact your broker directly if you have questions, require additional copies of this proxy statement/prospectus or wish to revoke your decision to household. These options are available to you at any time.

 

Q: Is the exchange ratio for the stock consideration subject to adjustment based on changes in the prices of DigitalGlobe common stock or MDA common shares? Can it be adjusted for any other reason?

 

A: As part of the merger consideration, you will receive a fixed number of MDA common shares, not a number of shares that will be determined based on a fixed market value. The market value of MDA common shares and the market value of DigitalGlobe common stock at the effective time may vary significantly from their respective values on the date that the merger agreement was executed or at other dates, such as the date of this proxy statement/prospectus or the date of the special meeting. Stock price changes may result from a variety of factors, including changes in MDA’s or DigitalGlobe’s respective businesses, operations or prospects, regulatory considerations, and general business, market, industry or economic conditions. The exchange ratio will not be adjusted to reflect any changes in the market value of MDA common shares or market value of DigitalGlobe common stock. Therefore, the aggregate market value of the MDA common shares that you are entitled to receive at the time that the merger is completed could vary significantly from the value of such shares on the date of this proxy statement/prospectus or the date of the special meeting.

However, the stock consideration will be equitably adjusted to provide you and MDA with the same economic effect as contemplated by the merger agreement in the event of any reclassification, stock split (including a reverse stock split), stock dividend or distribution, recapitalization, merger or other similar transaction involving DigitalGlobe common stock or MDA common shares prior to the completion of the merger.

 

Q: Who can answer my questions?

 

A: If you are a DigitalGlobe shareowner and you have any questions about the merger or you would like to request additional documents, including copies of this proxy statement/prospectus, please contact DigitalGlobe’s proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

1-888-750-5834 (toll-free from the U.S. and Canada)

1-412-232-3651 (from other locations)

 

Q: Where can I find more information about DigitalGlobe, MDA and the transactions contemplated by the merger agreement?

 

A: You can find out more information about DigitalGlobe, MDA and the transactions contemplated by the merger agreement by reading this proxy statement/prospectus and, with respect to DigitalGlobe and MDA, from various sources described in the section entitled “Where You Can Find Additional Information.”

 

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SUMMARY

This summary highlights information contained elsewhere in this proxy statement/prospectus and may not contain all of the information that might be important to you. DigitalGlobe and MDA urge you to read carefully the remainder of this proxy statement/prospectus, including the attached annexes, the documents incorporated by reference into this proxy statement/prospectus and the other documents to which DigitalGlobe and MDA have referred you. You may obtain the information incorporated by reference in this proxy statement/prospectus without charge by following the instructions in the section entitled “Where You Can Find Additional Information.” Each item in this summary includes a page reference to direct you to a more complete description of the topics presented in this summary.

Information about the Companies (page 149)

MacDonald, Dettwiler and Associates Ltd.

MDA was incorporated under the Canada Business Corporations Act and was continued under the Business Corporations Act (British Columbia) (the “BCA”) and the regulations thereunder, meaning that MDA is now governed by the BCA rather than the Canada Business Corporations Act. MDA is a global communications and information company providing operational solutions to commercial and government organizations worldwide. MDA’s business is focused on markets and customers with strong repeat business potential, primarily in the communications sector and the surveillance and intelligence sector. In addition, MDA conducts a significant amount of advanced technology development. MDA’s comprehensive capabilities in business and program management, systems engineering, systems integration, testing, and support services address complex customer requirements through the full solutions life cycle. MDA’s established global customer base is served by more than 4,800 employees operating from 15 locations in the United States, Canada, and internationally. MDA has committed in the merger agreement to use its reasonable best efforts to continue to, in consultation with the Government of Canada and its key stakeholders, execute its United States access strategy, which will include further restructuring of all or part of MDA’s corporate and operating structure so that the ultimate parent of DigitalGlobe and Holdings is incorporated in the United States by the end of 2019, subject to customary approvals.

MDA is a public company trading on the TSX under the ticker symbol “MDA.” MDA’s principal executive offices are located at One Embarcadero Center, Suite 500, San Francisco, California 94111, and its telephone number is 1-415-315-1550. As a condition to the closing of the merger, the MDA common shares to be issued in the merger will have been authorized for listing on either the NYSE or the NASDAQ.

Additional information about MDA can be found under its profile on SEDAR at www.sedar.com, its profile on EDGAR at www.sec.gov or its website at www.mdacorporation.com. The information contained in, or that can be accessed through, MDA’s website is not intended to be incorporated into this proxy statement/prospectus.

For further information about MDA, see the sections entitled “Where You Can Find Additional Information” and “Additional Information about MDA.”

SSL MDA Holdings, Inc.

Holdings is the holding company for MDA’s operating subsidiaries, which operate MDA businesses throughout the world. Holdings is incorporated in Delaware and has its headquarters in San Francisco, California. Holdings is a direct wholly owned subsidiary of MDA.

Holdings’ principal executive offices are located at One Market Plaza, Suite 4025, Spear Tower, San Francisco, California 94105 and its telephone number is 1-650-852-6313.

 



 

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Merlin Merger Sub, Inc.

Merger Sub is a Delaware corporation and a direct wholly owned subsidiary of Holdings and an indirect wholly owned subsidiary of MDA. Merger Sub was formed solely for the purpose of facilitating the merger. Merger Sub has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the merger agreement. By operation of the merger, Merger Sub will be merged with and into DigitalGlobe. As a result, DigitalGlobe will survive the merger as an indirect wholly owned subsidiary of MDA. Upon completion of the merger, Merger Sub will cease to exist as a separate entity.

Merger Sub’s principal executive offices are located at One Market Plaza, Suite 4025, Spear Tower, San Francisco, California 94105 and its telephone number is 1-650-852-6313.

DigitalGlobe, Inc.

DigitalGlobe is a leading global provider of high-resolution Earth imagery, data, services and analytics. Sourced from its own advanced satellite constellation and third-party providers, its imagery solutions and other services provide customers with accurate and mission-critical information about the changing planet, and support a wide variety of uses, including mission-planning, mapping and analysis, environmental monitoring, oil and gas exploration, and infrastructure management. Additionally, hundreds of developers are building new applications and machine learning algorithms on DigitalGlobe’s Geospatial Big Data platform and in its recently expanded services business. Each day users depend on DigitalGlobe to better understand the changing planet in order to save lives, resources and time. DigitalGlobe’s principal executive offices are located at 1300 West 120th Avenue, Westminster, Colorado 80234, and its telephone number is 1-303-684-4000.

DigitalGlobe was originally incorporated as EarthWatch on September 30, 1993 under the laws of the State of Colorado and reincorporated in the State of Delaware on August 21, 1995. On August 22, 2002, EarthWatch changed its name to DigitalGlobe, Inc. DigitalGlobe common stock has been listed on the NYSE and traded under the symbol “DGI” since its initial public offering in May 2009. On January 31, 2013, DigitalGlobe completed its acquisition of 100% of the outstanding stock of GeoEye, Inc., a leading provider of geospatial intelligence solutions.

Additional information about DigitalGlobe can be found under its profile on EDGAR at www.sec.gov or its website at www.digitalglobe.com. The information contained in, or that can be accessed through, DigitalGlobe’s website is not intended to be incorporated into this proxy statement/prospectus.

For further information about DigitalGlobe, see the section entitled “Where You Can Find Additional Information.”

Risk Factors (page 33)

The merger and an investment in MDA common shares involve risks, some of which are related to the merger and others of which are related to MDA’s business. In considering the merger, you should carefully consider the information about these risks set forth under the section entitled “Risk Factors,” together with the other information included or incorporated by reference in this proxy statement/prospectus.

The Merger and the Merger Agreement (page 151)

The merger agreement provides that, upon the terms and subject to the conditions set forth in the merger agreement, at the effective time, Merger Sub, an indirect wholly owned subsidiary of MDA and a direct wholly

 



 

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owned subsidiary of Holdings, will merge with and into DigitalGlobe. As a result, DigitalGlobe will continue as the surviving corporation in the merger, become an indirect wholly owned subsidiary of MDA and cease to be a publicly traded company. From and after the effective time, DigitalGlobe’s certificate of incorporation and DigitalGlobe’s bylaws will be the certificate of incorporation and bylaws set forth in Exhibit A and Exhibit B, respectively, of the merger agreement. The terms and conditions of the merger are contained in the merger agreement, which is described in this proxy statement/prospectus and attached to this proxy statement/prospectus as Annex A. You are encouraged to read the merger agreement carefully, as it is the legal document that governs the merger. All descriptions in this summary and elsewhere in this proxy statement/prospectus of the terms and conditions of the merger are qualified by reference to the merger agreement, which is incorporated herein by this reference.

Merger Consideration (page 152)

Under the terms of the merger agreement, if the merger is completed, each share of DigitalGlobe common stock outstanding immediately prior to the effective time (other than shares of DigitalGlobe common stock held directly or indirectly by MDA, DigitalGlobe or any of their respective subsidiaries and except for shares of DigitalGlobe common stock owned by holders who properly exercise their appraisal rights under the DGCL) will automatically be cancelled and converted into the right to receive (a) cash in an amount equal to US $17.50 and (b) 0.3132 of a validly issued, fully paid and non-assessable MDA common share, without interest and subject to any required withholding for taxes.

Each share of DigitalGlobe preferred stock issued and outstanding immediately prior to the effective time (other than shares of DigitalGlobe preferred stock held directly or indirectly by MDA, DigitalGlobe or any of their respective subsidiaries and except for shares of DigitalGlobe preferred stock owned by holders who properly exercise their appraisal rights under the DGCL) will be converted into the right to receive the merger consideration that the holder of such DigitalGlobe preferred stock would have been entitled to receive had such holder, immediately prior to the effective time, converted such DigitalGlobe preferred stock into DigitalGlobe common stock in accordance with the DigitalGlobe certificate of designation.

For a full description of the treatment of DigitalGlobe options, DigitalGlobe restricted stock units and other equity-based awards, see the sections entitled “The Merger Agreement—Treatment of DigitalGlobe Stock Options and Other Equity-Based Awards” and “The Merger Agreement—Merger Consideration.”

DigitalGlobe Board of Directors’ Recommendation (page 80)

The DigitalGlobe board of directors has (a) determined and declared that the merger agreement is advisable and fair to, and in the best interests of, DigitalGlobe and its shareowners, (b) determined that the merger agreement and the transactions contemplated thereby, including the merger, taken together, are at a price and on terms that are in the best interests of DigitalGlobe and its shareowners, (c) unanimously approved and declared advisable the merger agreement and the transactions contemplated thereby, including the merger, and (d) resolved, subject to the terms of the merger agreement, to recommend adoption of the merger agreement by the DigitalGlobe shareowners.

The DigitalGlobe board of directors unanimously recommends that DigitalGlobe shareowners vote “FOR” the merger proposal, “FOR” the advisory compensation proposal and “FOR” the adjournment proposal. For the factors considered by the DigitalGlobe board of directors in reaching this decision, see the section entitled “The Merger Proposal—DigitalGlobe’s Reasons for the Merger; Recommendation of the DigitalGlobe Board of Directors.”

 



 

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Comparative Per Share Market Price Information (page 29)

The following table presents the closing price per share of MDA common shares on the TSX and of DigitalGlobe common stock on the NYSE on (a) February 16, 2017, the last full trading day prior to media reports that DigitalGlobe and MDA were in merger discussions, (b) February 23, 2017, the last trading day prior to the date of public announcement of the execution of the merger agreement and (c) June 16, 2017, the last practicable trading day prior to the mailing of this proxy statement/prospectus. This table also shows the implied value of the merger consideration payable for each share of DigitalGlobe common stock on the relevant date. The implied value of the merger consideration represents the sum of US $17.50, the cash portion of the merger consideration, plus the stock portion of the merger consideration, based upon the product of the exchange ratio of 0.3132 and the closing price of MDA common shares on the TSX as of the applicable date (converted to U.S. dollars based on the Bank of Canada’s closing Canadian dollar-to-U.S. dollar exchange rate on the applicable date except as otherwise noted).

 

Date

   MDA Common
Shares

TSX
     DGI Common
Stock

NYSE
     Implied per share
value of merger
consideration
 
     (C$)      (US$)      (US$)  

February 16, 2017

   $ 73.40      $ 29.60      $ 35.00 (1) 

February 23, 2017

   $ 69.00      $ 34.05      $ 33.98  

June 16, 2017

   $ 62.78      $ 31.55      $ 32.36  

 

(1) Converted to U.S. dollars based on the Bank of Canada’s closing Canadian dollar-to-U.S. dollar exchange rate on February 21, 2017.

Opinions of DigitalGlobe’s Financial Advisors (page 84)

Opinion of PJT Partners

On February 23, 2017, PJT Partners rendered its oral opinion (which was subsequently confirmed in writing) to the DigitalGlobe board of directors that, as of such date and based upon and subject to the qualifications, limitations and assumptions stated in its opinion, the merger consideration to be received in the merger by the holders of DigitalGlobe common stock (other than DigitalGlobe, its subsidiaries, MDA and its affiliates) was fair from a financial point of view to the holders of DigitalGlobe common stock.

The full text of PJT Partners’ written opinion, dated as of February 23, 2017, is attached as Annex B to this proxy statement/prospectus. PJT Partners’ written opinion sets forth, among other things, the assumptions made, procedures followed, factors considered and limitations upon the review undertaken by PJT Partners in rendering its opinion. You are encouraged to read the opinion carefully in its entirety.

For a description of the opinion that the DigitalGlobe board of directors received from PJT Partners, see “The Merger Proposal—Opinions of DigitalGlobes Financial Advisors—Opinion of PJT Partners.

Opinion of Barclays

On February 23, 2017, Barclays rendered its oral opinion (which was subsequently confirmed in writing) to the DigitalGlobe board of directors that, as of such date and based upon and subject to the qualifications, limitations and assumptions stated in its opinion, from a financial point of view, the merger consideration to be offered to the holders of DigitalGlobe common stock (other than DigitalGlobe, its subsidiaries, MDA and its affiliates) was fair to such holders.

The full text of Barclays’ written opinion, dated as of February 23, 2017, is attached as Annex C to this proxy statement/prospectus. Barclays’ written opinion sets forth, among other things, the assumptions made,

 



 

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procedures followed, factors considered and limitations upon the review undertaken by Barclays in rendering its opinion. You are encouraged to read the opinion carefully in its entirety.

For a description of the opinion that the DigitalGlobe board of directors received from Barclays, see “The Merger Proposal—Opinions of DigitalGlobe’s Financial Advisors—Opinion of Barclays.

The DigitalGlobe Special Meeting (page 54)

Date, Time and Place of the Special Meeting

The special meeting will be held at 9:00 am, Mountain Time, on July 27, 2017, at DigitalGlobe’s corporate headquarters located at 1300 West 120th Avenue, Westminster, Colorado 80234, or at any adjournment or postponement thereof.

Record Date and Outstanding Shares of DigitalGlobe Common Stock and DigitalGlobe Preferred Stock

Only DigitalGlobe shareowners of record as of the close of business on June 16, 2017, which date is the record date for the special meeting, will be entitled to receive notice of, and to vote at, the special meeting or at any adjournment or postponement thereof.

As of the close of business on the record date, there were 62,219,652 shares of DigitalGlobe common stock and 80,000 shares of DigitalGlobe preferred stock issued and outstanding and entitled to notice of, and to vote at, the special meeting. Each share of DigitalGlobe common stock outstanding is entitled to one vote on each proposal presented for consideration at the special meeting. Each share of DigitalGlobe preferred stock outstanding is entitled to that whole number of votes equal to the number of shares of DigitalGlobe common stock into which such DigitalGlobe preferred stock would be convertible into as of the record date, voting together as a single class with the holders of common stock on an as-converted to common stock basis.

A complete list of DigitalGlobe shareowners entitled to vote at the special meeting will be available for inspection at DigitalGlobe’s principal place of business during regular business hours for a period of no less than 10 days before the special meeting and, during the special meeting, at the DigitalGlobe corporate headquarters, 1300 West 120th Avenue, Westminster, Colorado 80234.

Quorum

A majority of the shares of DigitalGlobe common stock and DigitalGlobe preferred stock outstanding and entitled to vote on the record date, must be present in person or represented by proxy to constitute a quorum at the special meeting, with DigitalGlobe preferred stock represented on an as-converted to DigitalGlobe common stock basis.

Abstentions will be deemed present and entitled to vote at the special meeting for the purpose of determining the presence of a quorum. DigitalGlobe common stock and DigitalGlobe preferred stock held by a DigitalGlobe shareowner that does not attend the special meeting or fails to submit a valid proxy to vote their shares at the meeting and DigitalGlobe common stock and DigitalGlobe preferred stock held in “street name” with respect to which the beneficial owner otherwise fails to give voting instructions with respect to their shares will not be considered present and entitled to vote at the special meeting for the purpose of determining the presence of a quorum.

If a quorum is not present or if, subject to approval of the adjournment proposal by DigitalGlobe shareowners, there are not sufficient votes for the approval of the merger proposal, DigitalGlobe expects that the

 



 

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special meeting will be adjourned to solicit additional proxies. At any subsequent reconvening of the special meeting, all proxies will be voted in the same manner as the manner in which such proxies would have been voted at the original convening of the special meeting, except for any proxies that have been validly revoked or withdrawn prior to the reconvened meeting.

Required Vote to Approve the Merger Proposal

Approval of the merger proposal requires the affirmative vote of the holders of a majority in voting power of the outstanding shares of DigitalGlobe common stock and DigitalGlobe preferred stock (on an as-converted to DigitalGlobe common stock basis), voting together as a single class, as of the record date. Therefore, if you do not submit a valid proxy or attend the special meeting to vote your shares of DigitalGlobe common stock and/or DigitalGlobe preferred stock or if you abstain from voting or fail to instruct your broker, bank or other nominee how to vote your shares on the merger proposal, it will have the same effect as a vote “AGAINST” the merger proposal.

Required Vote to Approve the Advisory Compensation Proposal

Approval, on an advisory (non-binding) basis, of the advisory compensation proposal requires the affirmative vote of holders of a majority of the shares of DigitalGlobe common stock and DigitalGlobe preferred stock (on an as-converted to DigitalGlobe common stock basis), voting together as a single class, that are present at the special meeting in person or by proxy and entitled to vote on the advisory compensation proposal. Therefore, if your shares of DigitalGlobe common stock or DigitalGlobe preferred stock are present at the special meeting but are not voted on the proposal, or if you abstain from voting on the advisory compensation proposal, each will have the same effect as a vote “AGAINST” the advisory compensation proposal. If you fail to submit a proxy or fail to attend the special meeting, or if you do not submit any instruction to your broker, bank or nominee, your shares of DigitalGlobe common stock or DigitalGlobe preferred stock will not be voted and will not be counted in determining the outcome of the advisory compensation proposal, assuming that a quorum is otherwise present. The vote on the advisory compensation proposal will not be binding on MDA, DigitalGlobe, the DigitalGlobe board of directors or any of its committees.

Required Vote to Approve the Adjournment Proposal

Approval of the adjournment proposal requires the affirmative vote of holders of a majority of the shares of DigitalGlobe common stock and DigitalGlobe preferred stock, voting together as a single class (on an as-converted to DigitalGlobe common stock basis), that are present at the special meeting in person or by proxy and entitled to vote on the adjournment proposal. Therefore, if your shares of DigitalGlobe common stock or DigitalGlobe preferred stock are present at the special meeting but are not voted on the proposal, or if you abstain from voting on the adjournment proposal, each will have the same effect as a vote “AGAINST” the adjournment proposal. If you fail to submit a proxy or fail to attend the special meeting, or if you do not submit any instruction to your broker, bank or nominee, your shares of DigitalGlobe common stock or DigitalGlobe preferred stock will not be voted and will not be counted in determining the outcome of the adjournment proposal, assuming that a quorum is otherwise present.

Voting by Directors and Executive Officers

As of the record date, the DigitalGlobe directors and executive officers had the right to vote approximately 774,326 shares of DigitalGlobe common stock, representing approximately 1.2% of the shares of DigitalGlobe capital stock then outstanding and entitled to vote at the special meeting (with DigitalGlobe preferred stock calculated on an as-converted to DigitalGlobe common stock basis). As of the record date, no DigitalGlobe director or executive officer owns any shares of DigitalGlobe preferred stock. It is expected that the DigitalGlobe

 



 

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directors and executive officers who are DigitalGlobe shareowners will vote “FOR” the merger proposal, “FOR” the advisory compensation proposal and “FOR” the adjournment proposal, although none of them has entered into any agreement requiring them to do so. As of the record date, the directors and executive officers of MDA owned, in the aggregate, approximately 1,000 shares of DigitalGlobe common stock, representing less than 0.01% of the shares of DigitalGlobe common stock and DigitalGlobe preferred stock then outstanding and entitled to vote at the special meeting. As of the record date, no MDA director or executive officer owns any shares of DigitalGlobe preferred stock.

Financing for the Merger (page 125)

The total amount of funds necessary to consummate the merger is expected to be approximately US$3.2 billion and will be funded by MDA, including the funds needed to (a) pay DigitalGlobe shareowners the aggregate cash consideration due to them under the merger agreement, which is expected to be approximately US$1.1 billion; (b) make payments pursuant to the merger agreement in respect of outstanding DigitalGlobe options and restricted stock units granted under the DigitalGlobe equity plans, which is expected to be approximately US$59.0 million; (c) if required, repay the outstanding indebtedness of DigitalGlobe under its Credit and Guaranty Agreement dated as of December 22, 2016, with Barclays Bank PLC as agent (the “Existing DigitalGlobe Credit Agreement”), which, if required, is expected to be approximately US$1.3 billion, plus accrued interest, (d) repay the outstanding indebtedness of MDA under the 2012 Credit Agreement dated as of November 2, 2012 with Royal Bank of Canada as agent (other than the revolving loans thereunder, if the financing of the new revolving facility of MDA is effected through an increase in the revolving credit commitments under the 2012 Credit Agreement, as described in the section entitled “The Merger Proposal—Financing for the Merger—Debt Commitment Letter” below), which is expected to be approximately C$504.5 million (US$430.0 million); (e) repay the outstanding MDA notes issued under the Note Purchase Agreement dated as of November 2, 2012 among MDA, as issuer, and the purchasers party thereto (the “MDA Note Purchase Agreement”), which is expected to be approximately C$301.2 million (US$226.1 million) and (f) pay fees and expenses payable by MDA, Holdings and Merger Sub under the merger agreement and in connection with the debt financing, which is expected to be approximately C$84.6 million (US$63.5 million). The obligation of MDA, Holdings and Merger Sub to complete the merger is not conditioned upon MDA obtaining financing.

The MDA Meeting and Shareholder Approval (page 124)

The TSX rules require security holder approval if the number of securities issued or issuable in payment of the purchase price for an acquisition exceeds 25% of the number of securities of the listed issuer which are outstanding, on a pre-acquisition, non-diluted basis. Based on the number of shares of DigitalGlobe common stock, shares of DigitalGlobe preferred stock, DigitalGlobe options and DigitalGlobe RSUs outstanding as of June 12, 2017, pursuant to the merger agreement, MDA would issue approximately 20,866,028 MDA common shares to DigitalGlobe securityholders at the effective time and would reserve for issuance approximately 600,556 MDA common shares, which would be issuable upon the vesting of the Converted RSUs following the effective time. The MDA common shares to be issued, or reserved for issuance, to current DigitalGlobe securityholders pursuant to the merger agreement will represent approximately 58.9% of the issued and outstanding MDA common shares on a non-diluted basis as of June 12, 2017. The actual number of MDA common shares to be issued, and reserved for issuance, pursuant to the merger agreement, however, will be determined immediately prior to the effective time based on the number of shares of DigitalGlobe common stock, shares of DigitalGlobe preferred stock and the number of DigitalGlobe options and DigitalGlobe RSUs outstanding at such time. Accordingly, MDA shareholders will be required to approve the issuance of common shares in connection with the merger. The date for the MDA meeting regarding such approval has not yet been set. For a more detailed description, see the section entitled “The Merger Proposal—The MDA Meeting and Shareholder Approval.”

 



 

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Listing of MDA Common Shares (page 114)

It is a condition to DigitalGlobe’s obligation to effect the merger that the MDA common shares to be issued pursuant to the merger agreement and in respect of certain DigitalGlobe equity awards are authorized for listing on the NYSE or NASDAQ, in each case subject to official notice of issuance. It is a condition to DigitalGlobe’s and MDA’s obligation to effect the merger that the MDA common shares to be issued pursuant to the merger agreement are conditionally approved for listing on the TSX, subject only to the provision of such required documentation as is customary in the circumstances. Under the merger agreement, MDA is required to use its reasonable best efforts to obtain the listing and admission for trading of the MDA common shares issued as merger consideration on (a) either the NYSE or NASDAQ and (b) the TSX. The TSX has conditionally approved the listing of the MDA common shares to be issued pursuant to the merger, subject to the approval by MDA shareholders of such issuance of MDA common shares, as discussed in the section entitled “The Merger Proposal—The MDA Meeting and Shareholder Approval,” and filing certain documents following the closing of the merger.

Delisting and Deregistration of DigitalGlobe Common Stock (page 115)

As promptly as practicable after the effective time, and in any event no more than 10 days after the effective time, DigitalGlobe common stock currently listed on the NYSE will cease to be listed on the NYSE and will be deregistered under the U.S. Exchange Act.

Certain U.S. Federal Income Tax Consequences of the Merger (page 137)

The exchange of shares of DigitalGlobe common stock for the merger consideration, and the conversion of DigitalGlobe preferred stock into the right to receive the merger consideration that the holder thereof would have been entitled to receive had such holder, immediately prior to the effective time, converted such DigitalGlobe preferred stock into DigitalGlobe common stock, will be a taxable transaction for U.S. federal income tax purposes. You should read the section entitled “The Merger Proposal – Certain U.S. Federal Income Tax Consequences of the Merger” and consult your tax advisors regarding the U.S. federal income tax consequences of the merger to you in your particular circumstances, as well as tax consequences arising under the laws of any state, local and/or other tax laws.

Certain Canadian Federal Income Tax Considerations of Holding MDA Common Shares (page 144)

Subject to certain exceptions, any gain realized by a holder from the disposition of MDA common shares who, for the purposes of the Canadian Tax Act and at all relevant times (a) is a beneficial owner of the MDA common shares; (b) is not resident, and is not deemed to be resident, in Canada; (c) holds the MDA common shares as capital property; and (d) does not use or hold, and is not deemed to use or hold, the MDA common shares in connection with carrying on a business in Canada (each of whom we refer to as a “Non-Canadian Holder”) should not be subject to tax in Canada. Dividends paid or deemed to be paid to a Non-Canadian Holder on MDA common shares will generally be subject to 25% Canadian non-resident withholding tax, subject to any reduction in such rate pursuant to the terms of an applicable income tax treaty. You should read the section entitled “The Merger Proposal—Certain Canadian Federal Income Tax Considerations of Holding MDA Common Shares” of this proxy statement/prospectus and consult your tax advisors regarding the Canadian federal income tax consequences of acquiring, holding and disposing of MDA common shares, as well as tax consequences arising under the laws of any country, province or other jurisdiction that may be applicable to a Non-Canadian Holder.

Accounting Treatment of the Merger (page 124)

In accordance with IFRS, MDA will account for the merger as a business combination applying the acquisition method of accounting with MDA as the acquirer. For a more detailed discussion of the accounting treatment of the merger, see the section entitled “The Merger Proposal—Accounting Treatment of the Merger.”

 



 

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Treatment of DigitalGlobe Stock Options and Other Equity-Based Awards (page 115)

Options

At the effective time, each option to purchase DigitalGlobe common stock that has been granted or assumed by DigitalGlobe and is outstanding and unexercised immediately prior to the effective time, whether vested or unvested, will be cancelled in exchange for the right to receive a combination of cash and a number of MDA common shares, each of which will be calculated as described in the section entitled “The Merger Proposal—Interests of DigitalGlobes Directors and Executive Officers in the Merger—Treatment of DigitalGlobe Equity Awards” below.

Restricted Stock Units

At the effective time, each outstanding restricted stock unit granted by DigitalGlobe that remains subject to one or more unsatisfied performance conditions for a performance period that includes the date on which the effective time occurs, as well as each outstanding DigitalGlobe restricted stock unit that is then vested, will be cancelled in exchange for the right to receive a combination of cash and a number of MDA common shares, each of which will be calculated as described in the section entitled “The Merger Proposal—Interests of DigitalGlobe’s Directors and Executive Officers in the Merger—Treatment of DigitalGlobe Equity Awards” below.

At the effective time, each outstanding restricted stock unit granted by DigitalGlobe that remains unvested (and is not a performance-based restricted stock unit as described above) will be assumed by MDA and converted into the right to receive a combination of cash and a number of MDA common shares, each of which will be calculated as described in the section entitled “The Merger Proposal—Interests of DigitalGlobe’s Directors and Executive Officers in the Merger—Treatment of DigitalGlobe Equity Awards” below.

For a more detailed description of the treatment of DigitalGlobe equity awards, see the section entitled “The Merger Agreement—Treatment of DigitalGlobe Stock Options and Other Equity-Based Awards.”

Regulatory Approvals Required for the Merger (page 172)

To complete the merger and the other transactions contemplated by the merger agreement, DigitalGlobe and MDA are required to use their reasonable best efforts to obtain all necessary authorizations, consents and approvals and to make all necessary notifications, registrations and filings, including any registrations, notifications and filings required to be made in connection with obtaining such approvals. Under the merger agreement, DigitalGlobe and MDA are required, among other actions, to (a) file a notification and report form and obtain the expiration or termination of the waiting period under the HSR Act, (b) file a joint voluntary notice with and obtain approval from CFIUS with respect to the merger and (c) make any required filings in connection with any other required regulatory approvals, including approval from the Defense Security Service (which we refer to as “DSS”), the Directorate of Defense Trade Controls of the U.S. Department of State (which we refer to as “DDTC”), the National Oceanic and Atmospheric Administration of the U.S. Department of Commerce (which we refer to as “NOAA”) and the U.S. Federal Communications Commission (which we refer to as the “FCC”).

On March 17, 2017, each of DigitalGlobe and MDA timely filed a Pre-merger Notification and Report Form pursuant to the HSR Act with the DOJ and FTC, and on April 10, 2017, the FTC granted early termination of the HSR waiting period. On March 20, 2017, DigitalGlobe and MDA filed the required applications for FCC consent to the transfer of control to MDA of DigitalGlobe’s license subsidiary, and the FCC granted the applications on April 26, 2017 and May 16, 2017. On April 12, 2017, DigitalGlobe and MDA submitted the formal CFIUS notice, and on May 30, 2017, CFIUS notified the parties that it is initiating a 45-day investigation. On

 



 

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April 10, 2017, DigitalGlobe and MDA filed the required application for NOAA consent, and on April 12, 2017, NOAA received the applications and initiated NOAA’s formal review process. NOAA will make a determination on the applications within 120 days of receipt subject to potential tolling.

DigitalGlobe and MDA are not currently aware of any material governmental filings, authorizations, approvals or consents that are required prior to the parties’ completion of the merger other than those described in this proxy statement/prospectus. There can be no assurance, however, if and when any of the approvals required to be obtained for the merger and the other transactions contemplated by the merger agreement will be obtained or as to the conditions or limitations that such approvals may contain or impose. Under the merger agreement, neither MDA nor any of its subsidiaries (including Holdings and Merger Sub) will be required to, as a condition to obtaining any required approval or resolving any objection of any governmental entity, offer or accept, or agree, commit to agree or consent to, any “Extraordinary Condition.” An “Extraordinary Condition” is defined as any undertaking, term, condition, liability, obligation, commitment, sanction or other measure that (a) would or would reasonably be expected to result in a material change to the timing of MDA’s plan to reincorporate in the United States as set forth in the merger agreement, (b) would have a material negative financial impact on MDA and its subsidiaries (on a consolidated basis) or DigitalGlobe and its subsidiaries (on a consolidated basis) or (c) would require MDA or any of its subsidiaries (including DigitalGlobe and its subsidiaries) to enter into a proxy agreement or voting trust agreement with respect to the services provided by DigitalGlobe under the NGA contract.

For a more detailed description of the regulatory approvals required for the merger, see the section entitled “The Merger Agreement—Regulatory Approvals” and the section entitled “The Merger Agreement—Conditions That Must Be Satisfied or Waived for the Merger to Occur.”

Appraisal or Dissenters’ Rights (page 130)

If the merger is completed, DigitalGlobe’s shareowners will be entitled to appraisal rights under Section 262 of the DGCL. This means that you are entitled to have the fair value of your shares of DigitalGlobe common stock and DigitalGlobe preferred stock determined by the Delaware Court of Chancery and to receive payment based on that valuation in lieu of the merger consideration if you follow exactly the procedures set forth in Section 262 of the DGCL. The ultimate amount you receive in an appraisal proceeding may be less than, equal to or more than the amount you would have received under the merger agreement.

To exercise your appraisal rights, you must submit a written demand for appraisal to DigitalGlobe before the vote is taken on the merger proposal, you must not vote (either in person or by proxy) in favor of the merger proposal and you must hold your shares of DigitalGlobe common stock and/or DigitalGlobe preferred stock for which you have demanded appraisal through the effective time. If you fail to follow exactly the procedures set forth in Section 262 of the DGCL, you may lose your appraisal rights. If you hold your shares of DigitalGlobe common stock and/or DigitalGlobe preferred stock through a bank, brokerage firm or other nominee and you wish to exercise your appraisal rights, you should consult with your bank, brokerage firm or other nominee to determine the appropriate procedures for the making of a demand for appraisal by your bank, brokerage firm or other nominee.

In view of the complexity of Section 262 of the DGCL, shareowners who wish to pursue appraisal rights should consult their legal and financial advisors.

Litigation Relating to the Merger (page 135)

DigitalGlobe and its board of directors are named as defendants in five lawsuits (four of which are putative class actions) filed by purported stockholders of DigitalGlobe that challenge the merger. The lawsuits include

 



 

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George Assad v. DigitalGlobe, Inc., et al., Case No. 1:17-cv-01097-NYW, Jeweltex Manufacturing Inc. Retirement Plan v. DigitalGlobe, Inc., et al., Case No. 1:17-cv-01140-STV, Royce Bussey v. DigitalGlobe, Inc., et al., Case No. 1:17-cv-01159-MEH, Dane Gussin v. DigitalGlobe, Inc., et al., Case No. 1:17-cv-01190-CMA, and Stuart Zand v. DigitalGlobe, Inc., et al., Case No. 1:17-cv-00592-RGA, all filed in the U.S. District Court for the District Court of Colorado except for Zand (filed in the U.S. District Court for the District of Delaware). The complaints allege, among other things, that in connection with MDA’s proposed acquisition of DigitalGlobe, DigitalGlobe and its board of directors purportedly agreed to a supposedly inadequate price for the DigitalGlobe capital stock, provided allegedly misleading and incomplete disclosures in the F-4 registration statement and potentially engaged in self-dealing. MDA, Holdings, and Merger Sub are also named as defendants in two of the lawsuits. Plaintiffs seek as relief, among other things, declaratory and injunctive relief, including enjoining or rescinding the transaction and rescissory damages to the extent already implemented, an order directing the dissemination of a registration statement that is not false or misleading, and an award of attorneys’ and experts’ fees.

Except as described in the section entitled “The Merger Proposal—Litigation Relating to the Merger,” the defendants have not yet responded to any of the complaints. While it is too early to predict the outcome of litigation or a reasonable range of potential losses, DigitalGlobe and MDA believe these lawsuits are without merit. Additional lawsuits arising out of or relating to the merger agreement or the merger may be filed in the future. For additional information, see the section entitled “The Merger Proposal—Litigation Relating to the Merger.”

Conditions to the Merger (page 174)

Each party’s obligation to complete the merger is subject to the satisfaction or waiver of the following mutual conditions:

 

    approval and adoption of the merger agreement by the DigitalGlobe shareowners holding a majority in voting power of the outstanding shares of DigitalGlobe common stock and DigitalGlobe preferred stock (on an as-converted to DigitalGlobe common stock basis), voting together as a single class (the condition described in this bullet is referred to as the “DigitalGlobe shareowner approval condition”);

 

    the approval of the issuance of MDA common shares in connection with the merger by a majority of the votes cast on such matter at the MDA meeting;

 

    absence of any law or action taken by any governmental entity of competent jurisdiction (whether temporary, preliminary or permanent) which restrains, precludes, enjoins or otherwise prohibits the consummation of the merger or makes the merger illegal (the condition described in this bullet is referred to as the “no injunction condition”);

 

    any waiting period (and any extension thereof) applicable to the consummation of the merger under any competition law will have expired or been terminated (the condition described in this bullet is referred to as the “expiration or termination of any waiting period condition”);

 

    the receipt of CFIUS approval;

 

    the receipt of DSS approval, and any approval, consent, authorization, filing, registration, license, franchise, permit, exemption, variance or non-objection of NOAA, DDTC or any other governmental entity necessary to consummate the transactions contemplated by the merger agreement, which we refer to as the “regulatory approvals” (the condition described in this bullet and the preceding bullet is referred to as the “CFIUS and regulatory approvals condition”);

 

    the registration statement of which this proxy statement/prospectus forms a part having been declared effective by the SEC and no stop order suspending the effectiveness of the registration statement having been issued by the SEC and no proceedings for that purpose shall be pending or threatened by the SEC; and

 



 

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    the MDA common shares issuable to the DigitalGlobe shareowners in connection with the merger and in respect of DigitalGlobe equity awards will have been conditionally approved for listing on the TSX, subject only to the provision of such required documentation as is customary in the circumstances.

The obligation of DigitalGlobe to consummate the merger is subject to the satisfaction or waiver of additional conditions, including:

 

    the accuracy of the representations and warranties of MDA, Holdings and/or Merger Sub contained in the merger agreement as of the date of the merger agreement and as of the closing date (except to the extent expressly made as of an earlier date, in which case as of such date), subject to the materiality standards (if any) provided in the merger agreement, and the receipt by DigitalGlobe of a certificate signed on behalf of MDA by each of two senior executive officers of MDA to the foregoing effect;

 

    the performance by each of MDA and Merger Sub in all material respects of their obligations under the merger agreement required to be performed by it at or prior to the effective time, and the receipt by DigitalGlobe of a certificate signed on behalf of each of MDA and Merger Sub by the CEO of each of MDA and Merger Sub to such effect;

 

    the absence of any fact, circumstance, effect, change, event or development that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on MDA, and the receipt by DigitalGlobe of a certificate signed on behalf of MDA by an executive officer of MDA to such effect;

 

    the MDA common shares issuable to the DigitalGlobe shareowners in connection with the merger and in respect of the DigitalGlobe equity awards will have been authorized for listing on the NYSE or NASDAQ, in either case, subject to official notice of issuance; and

 

    DigitalGlobe will have received an opinion, or MDA will have received an opinion that DigitalGlobe can rely on, of a nationally recognized tax advisor or legal counsel to the effect that Section 7874 of the Code should not apply in such a manner so as to cause MDA to be treated as a domestic corporation for U.S. federal income tax purposes pursuant to Section 7874(b) of the Code after giving effect to the transactions contemplated by the merger agreement (the condition described in this bullet is referred to as the “DigitalGlobe tax opinion condition”).

The obligations of MDA and Merger Sub to consummate the merger are subject to the satisfaction or waiver of further conditions, including:

 

    the accuracy of the representations and warranties of DigitalGlobe contained in the merger agreement as of the date of the merger agreement and as of the closing date (except to the extent expressly made as of an earlier date, in which case as of such date), subject to the materiality standards (if any) provided in the merger agreement, and the receipt by MDA of a certificate signed on behalf of DigitalGlobe by each of two senior executive officers of DigitalGlobe to the foregoing effect;

 

    the performance by DigitalGlobe in all material respects of its obligations under the merger agreement required to be performed by it at or prior to the effective time, and the receipt by MDA of a certificate signed on behalf of DigitalGlobe by its CEO or CFO to such effect;

 

    the absence of any fact, circumstance, effect, change, event or development that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on DigitalGlobe;

 

    receipt of a certificate, meeting the requirements of Treasury Regulations Section 1.1445-2(c)(3) to the effect that DigitalGlobe is not, and has not been during the applicable time period set forth in Section 897(c)(1)(A)(ii) of the Code, a United States real property holding corporation and, accordingly, the shares of DigitalGlobe common stock are not U.S. real property interests; and

 



 

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    MDA will have received an opinion, or DigitalGlobe will have received an opinion that MDA can rely on, of a nationally recognized tax advisor or legal counsel to the effect that Section 7874 of the Code should not apply in such a manner so as to cause MDA to be treated as a domestic corporation for U.S. federal income tax purposes pursuant to Section 7874(b) of the Code after giving effect to the transactions contemplated by the merger agreement from and after the closing date (the condition described in this bullet is referred to as the “MDA tax opinion condition”).

No Solicitation (page 165)

The merger agreement generally restricts DigitalGlobe’s and MDA’s ability to: (a) initiate, solicit, knowingly facilitate or knowingly encourage any inquiries, proposals or offers with respect to, or the making of, any proposal or offer that constitutes or could reasonably be expected to lead to, an acquisition proposal (as defined in the section entitled “The Merger Agreement—No Solicitation”); (b) enter into, participate or engage in, or continue, any discussions or negotiations with respect to any acquisition proposal, or any inquiry or indication of interest that could reasonably be expected to lead to an acquisition proposal; or (c) furnish or provide any non-public information regarding it or its subsidiaries to any person, or provide access to any person to the properties, assets or employees of it or its subsidiaries in connection with or in response to any acquisition proposal or any inquiry or indication of interest that could reasonably be expected to lead to an acquisition proposal; (d) approve or recommend to the DigitalGlobe shareowners or MDA shareholders, as applicable, any acquisition proposal; or (e) approve or recommend to the DigitalGlobe shareowners or MDA shareholders, as applicable, or execute or enter into, any letter of intent or agreement in principal, or any other contract contemplating or otherwise relating to an acquisition proposal (other than an acceptable confidentiality agreement as provided for in the merger agreement).

However, under certain circumstances specified in the merger agreement, if DigitalGlobe or MDA, as applicable, receives a bona fide written acquisition proposal that did not result from a material violation of such party’s solicitation restrictions described above, then such party may (a) enter into, participate or engage in discussion or negotiations with the person making such acquisition proposal; and (b) furnish or provide non-public information, and provide access to its properties, assets and employees to the person making such acquisition proposal, if prior to taking such action, such party’s board of directors has determined in good faith, after consultation with its outside legal counsel and independent financial advisors, that such acquisition proposal is, or could reasonably be expected to lead to a superior proposal (as such term is defined in the section entitled “The Merger Agreement—No Solicitation”), and after consultation with its outside counsel, such party’s board of directors has determined in good faith that the failure to take such action would be inconsistent with its fiduciary duties under applicable law.

For further information, including what constitutes an “acquisition proposal” and a “superior proposal,” see the section entitled “The Merger Agreement—No Solicitation.”

Termination of the Merger Agreement (page 177)

Subject to conditions and circumstances in the merger agreement, the merger agreement may be terminated as follows:

 

    by mutual written consent of MDA and DigitalGlobe.

 

    by either DigitalGlobe or Holdings upon written notice to the other party:

 

    if the merger has not been completed on or before 5:00 p.m. Eastern time on December 7, 2017 (which we refer to as the “end date”) (the right to terminate the merger agreement pursuant to this sub-bullet is referred to as the “end date termination right”);

 



 

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    if any governmental entity has issued a final and non-appealable statute, rule, order, decree or regulation or taken any other action that restrains, enjoins or otherwise prohibits the merger or makes the merger illegal (the right to terminate the merger agreement pursuant to this sub-bullet is referred to as the “injunction termination right”);

 

    if DigitalGlobe shareowner approval of the merger agreement is not obtained at the special meeting of DigitalGlobe shareowners (the right to terminate the merger agreement pursuant to this sub-bullet is referred to as the “failure to obtain DigitalGlobe shareowner approval termination right”);

 

    if MDA shareholder approval of the MDA share issuance in connection with the merger is not obtained at the MDA meeting (the right to terminate the merger agreement pursuant to this sub-bullet is referred to as the “failure to obtain MDA shareholder approval termination right”); or

 

    if CFIUS notifies MDA and DigitalGlobe in writing that CFIUS intends to send a report to the President of the United States recommending that the President act to suspend or prohibit the merger (the right to terminate the merger agreement pursuant to this sub-bullet is referred to as the “CFIUS notification termination right”).

 

    by DigitalGlobe:

 

    if MDA has breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in the merger agreement, which breach or failure to perform (a) would cause certain of the conditions to DigitalGlobe’s obligation to consummate the merger to not be satisfied, and (b) cannot be cured or is not cured by MDA within 30 days after receipt of written notice given by DigitalGlobe to MDA of such breach or failure to perform (DigitalGlobe’s right to terminate the merger agreement pursuant to this sub-bullet is referred to as “DigitalGlobe’s material breach termination right”);

 

    if, prior to obtaining the MDA shareholder approval, (a) the MDA board of directors has (i) entered into any agreement in connection with an acquisition proposal with respect to MDA or (ii) approved or recommended any acquisition proposal with respect to MDA other than the merger, or (b) the MDA board of directors makes a change in recommendation or resolves to make a change in recommendation (DigitalGlobe’s right to terminate the merger agreement pursuant to this bullet is referred to as the “DigitalGlobe’s change in recommendation termination right”); or

 

    prior to obtaining the DigitalGlobe shareowner approval, in order to enter into a definitive agreement in connection with a superior proposal with respect to DigitalGlobe and DigitalGlobe has complied with its obligations under the merger agreement to take such action, and DigitalGlobe pays in full a termination fee in the amount of $85 million to MDA (DigitalGlobe’s right to terminate the merger agreement pursuant to this bullet is referred to as the “DigitalGlobe’s superior proposal termination right”).

 

    by Holdings:

 

    if DigitalGlobe has breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in the merger agreement, which breach or failure to perform (a) would cause certain of the conditions to MDA’s or Merger Sub’s obligation to consummate the merger to not be satisfied, and (b) cannot be cured by DigitalGlobe or is not cured by DigitalGlobe within 30 days after receipt of written notice given by MDA to DigitalGlobe of such breach or failure to perform (Holdings’ right to terminate the merger agreement pursuant to this sub-bullet is referred to as the “Holdings’ material breach termination right”);

 



 

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    if, prior to receipt of the DigitalGlobe shareowner approval, (a) the DigitalGlobe board of directors has (i) entered into any agreement in connection with an acquisition proposal with respect to DigitalGlobe or (ii) approved or recommended any acquisition proposal with respect to DigitalGlobe other than the merger, or (b) the DigitalGlobe board of directors makes a change in recommendation or has resolved to make a change in recommendation (Holdings’ right to terminate the merger agreement pursuant to this bullet is referred to as the “Holdings’ change in recommendation termination right”); or

 

    if (a) (i) the NGA contract has been terminated or cancelled or the option to renew the NGA contract for the next contract year after the date of the merger agreement has not been exercised by NGA, (ii) NGA has provided clear, unambiguous authorized notice to DigitalGlobe that the NGA contract will, on or before the business date after the next scheduled renewal date after the date of the merger agreement, be terminated or cancelled or the option to renew the NGA contract for the next contract year will not be exercised by NGA or (iii) NGA materially changes the scope under a specified portion of the NGA contract which materially decreases the revenue to be received by DigitalGlobe under the NGA contract for the remainder of the current option year of the NGA contract, and (b) MDA has paid DigitalGlobe a reverse termination fee in an amount of $150 million (Holdings’ right to terminate the merger agreement pursuant to this bullet is referred to as “Holdings’ NGA termination right”).

Termination Fees and Expenses (page 177)

DigitalGlobe has agreed to pay to Holdings a termination fee of $85 million, which we refer to as the “termination fee”, if:

 

    the merger agreement is terminated by Holdings pursuant to Holdings’ change in recommendation termination right;

 

    the merger agreement is terminated by DigitalGlobe pursuant to DigitalGlobe’s superior proposal termination right;

 

    the merger agreement is terminated:

 

    by either DigitalGlobe or Holdings pursuant to the end date termination right (other than a situation where MDA would be obligated to pay the reverse termination fee to DigitalGlobe as described below) or by Holdings pursuant to Holdings’ material breach termination right;

 

    after an acquisition proposal with respect to DigitalGlobe has been proposed or announced by any person; and

 

    within 12 months of such termination DigitalGlobe or any of its subsidiaries enters into a definitive agreement with respect to (or consummates) an acquisition proposal with respect to DigitalGlobe (provided that, for the purposes of this and the immediately preceding sub-bullet, all references to 20% in the term “acquisition proposal” with respect to DigitalGlobe will be changed to 50%); or

 

    the merger agreement is terminated:

 

    by either DigitalGlobe or Holdings pursuant to the failure to obtain DigitalGlobe shareowner approval termination right;

 

    after an acquisition proposal with respect to DigitalGlobe has been publicly proposed or publicly announced by any person; and

 

   

within 12 months of such termination DigitalGlobe or any of its subsidiaries enters into a definitive agreement with respect to (or consummates) an acquisition proposal with respect to

 



 

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DigitalGlobe (provided that, for the purposes of this and the immediately preceding sub-bullet, all references to 20% in the term “acquisition proposal” with respect to DigitalGlobe will be changed to 50%) (provided that the termination fee will be reduced by any previous payment by DigitalGlobe of the expenses of MDA).

MDA, on behalf of Holdings, has agreed to pay to DigitalGlobe the termination fee if:

 

    the merger agreement is terminated by DigitalGlobe pursuant to DigitalGlobe’s change in recommendation termination right;

 

    the merger agreement is terminated:

 

    by either DigitalGlobe or Holdings pursuant to the end date termination right or by DigitalGlobe pursuant to DigitalGlobe’s material breach termination right;

 

    after an acquisition proposal with respect to MDA has been proposed or announced by any person; and

 

    within 12 months of such termination MDA or any of its subsidiaries enters into a definitive agreement with respect to (or consummates) an acquisition proposal with respect to MDA (provided that, for the purposes of this and the immediately preceding sub-bullet, all references to 20% in the term “acquisition proposal” with respect to MDA will be changed to 50%); or

 

    the merger agreement is terminated:

 

    by either DigitalGlobe or Holdings pursuant to the failure to obtain MDA shareholder approval termination right;

 

    after an acquisition proposal with respect to MDA has been publicly proposed or publicly announced by any person; and

 

    within 12 months of such termination MDA or any of its subsidiaries enters into a definitive agreement with respect to (or consummates) an acquisition proposal with respect to MDA (provided that, for the purposes of this and the immediately preceding sub-bullet, all references to 20% in the term “acquisition proposal” with respect to MDA will be changed to 50%) (provided that the termination fee will be reduced by any previous payment by MDA of the expenses of DigitalGlobe).

MDA, on behalf of Holdings, has agreed to pay to DigitalGlobe a reverse termination fee of $150 million, which we refer to as the “reverse termination fee,” if:

 

    the merger agreement is terminated by Holdings pursuant to Holdings’ NGA termination right;

 

    the merger agreement is terminated, at a time when the specific conditions to MDA’s and Merger Sub’s obligation to effect the merger have been satisfied or waived (other than the MDA tax opinion condition and any conditions that by their nature are to be satisfied at the closing date (so long as such conditions are then capable of being satisfied)), by DigitalGlobe pursuant to DigitalGlobe’s material breach termination right due to a breach by MDA, Holdings or Merger Sub of certain regulatory covenants set forth in the merger agreement, at a time when (A) the expiration or termination of any waiting period condition or CFIUS and regulatory approvals condition have not been satisfied or (B) the no injunction condition has not been satisfied, due to a matter related to a competition law, CFIUS approval or any regulatory approval at the time of such termination; or

 

   

the merger agreement is terminated, at a time when (a) the specific conditions to MDA’s and Merger Sub’s obligation to effect the merger and (b) the DigitalGlobe shareowner approval condition have been satisfied or waived (other than the MDA tax opinion condition and any conditions that by their

 



 

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nature are to be satisfied at the closing date, but subject to the satisfaction or waiver of such conditions), by:

 

    Holdings or DigitalGlobe pursuant to the CFIUS notification termination right;

 

    Holdings or DigitalGlobe pursuant to the end date termination right, at a time when (A) the expiration or termination of any waiting period condition or the CFIUS and regulatory approvals condition have not been satisfied, (B) the no injunction condition has not been satisfied due to a matter related to a competition law, CFIUS approval or any regulatory approval or (C) the MDA tax opinion condition has not been satisfied or waived by MDA;

 

    Holdings or DigitalGlobe pursuant to the injunction termination right as a result of a matter related to a competition law, CFIUS approval or any regulatory approval; or

 

    Holdings pursuant to the failure to obtain MDA shareholder approval termination right at a time when: (A) the expiration or termination of any waiting period condition or the CFIUS and regulatory approvals condition have not been satisfied or (B) the no injunction condition has not been satisfied due to a matter related to a competition law, CFIUS approval or any regulatory approval.

Notwithstanding the immediately preceding sub-bullet, if the MDA shareholder approval of the MDA common share issuance is not obtained and, prior to the MDA meeting, the MDA board of directors has made a change in recommendation as a result of a superior proposal with respect to MDA (and such proposal has not been withdrawn prior to the MDA meeting), then MDA will be required to pay DigitalGlobe the termination fee instead of the reverse termination fee.

In addition to its own fees and expenses, each of DigitalGlobe and MDA may be required to reimburse the other party for its reasonable out-of-pocket expenses incurred in connection with the merger agreement, subject to a cap of $10 million, in the event the DigitalGlobe shareowners or MDA shareholders, respectively, do not approve the matters required to be voted upon by DigitalGlobe shareowners or MDA shareholders, respectively, and the merger agreement is terminated.

Your Rights as an MDA Shareholder Will Be Different from Your Rights as a DigitalGlobe Shareowner (page 271)

As a result of the merger, the holders of DigitalGlobe common stock, DigitalGlobe preferred stock, and certain equity awards will become holders of MDA common shares and their rights will be governed by British Columbia law, MDA’s notice of articles and MDA’s articles instead of the DGCL, DigitalGlobe’s amended and restated certificate of incorporation, DigitalGlobe’s amended and restated bylaws and the DigitalGlobe certificate of designation. Following the merger, former DigitalGlobe shareowners will have different rights as MDA shareholders than they did as DigitalGlobe shareowners. For a summary of the material differences between the rights of DigitalGlobe shareowners and MDA shareholders, see the section entitled “Comparison of Rights of MDA Shareholders and DigitalGlobe Shareowners.”

Interests of DigitalGlobe’s Directors and Executive Officers in the Merger (page 115)

In considering the recommendation of the DigitalGlobe board of directors with respect to the merger agreement, you should be aware that DigitalGlobe’s directors and executive officers have interests in the merger that are different from, or in addition to, the interests of DigitalGlobe’s shareowners generally. Interests of directors and executive officers that may differ from or may be in addition to the interests of DigitalGlobe’s shareowners generally include:

 

   

At the effective time, each option to purchase DigitalGlobe common stock that has been granted or assumed by DigitalGlobe and is outstanding and unexercised immediately prior to the effective time,

 



 

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whether vested or unvested, will be cancelled in exchange for the right to receive a combination of cash and a number of MDA common shares, each of which will be calculated as described in the section entitled “The Merger Proposal—Interests of DigitalGlobe’s Directors and Executive Officers in the Merger—Treatment of DigitalGlobe Equity Awards” below. Assuming that the merger was completed on May 25, 2017, the estimated aggregate amount that would be payable to DigitalGlobe’s executive officers as a group for their DigitalGlobe options is $4,356,957 in cash and 77,977 MDA common shares and the estimated aggregate amount that would be payable to DigitalGlobe’s non-employee directors for their DigitalGlobe options is $334,096 in cash and 5,979 MDA common shares.

 

    At the effective time, each outstanding restricted stock unit granted by DigitalGlobe that remains subject to one or more unsatisfied performance conditions for a performance period that includes the date on which the effective time occurs, as well as each outstanding DigitalGlobe restricted stock unit that is then vested, will be cancelled in exchange for the right to receive a combination of cash and a number of MDA common shares, each of which will be calculated as described in the section entitled “The Merger Proposal—Interests of DigitalGlobes Directors and Executive Officers in the Merger—Treatment of DigitalGlobe Equity Awards” below. Assuming that the merger was completed on May 25, 2017, the estimated aggregate amount that would be payable to DigitalGlobe’s executive officers as a group for their DigitalGlobe performance-based restricted stock units is $13,427,840 in cash and 240,320 MDA common shares (calculated assuming that the portion of such performance-based restricted stock units that remain subject to an unsatisfied performance condition based on a relative total stockholder return measure vest at the following performance level: 87% of the “target” level for the awards granted in 2015, 200% of the “target” level (maximum performance) for the awards granted in 2016, and 141% of the “target” level for the awards granted in 2017, in each case such assumption is based on a performance determination as though the applicable performance period ended on May 24, 2017 and using an average of the closing prices for a share of DigitalGlobe common stock for the period of five trading days ending on May 24, 2017 as the value of DigitalGlobe common stock for purposes of such performance determination), and the estimated aggregate amount that would be payable to DigitalGlobe’s non-employee directors as a group for their DigitalGlobe vested restricted stock units is $2,195,795 in cash and 39,298 MDA common shares. DigitalGlobe’s non-employee directors do not hold any DigitalGlobe performance-based RSUs. DigitalGlobe’s executive officers do not currently hold any DigitalGlobe vested restricted stock units that have not previously been settled.

 

    At the effective time, each outstanding restricted stock unit granted by DigitalGlobe that remains unvested (and is not a performance-based restricted stock unit as described above) will be assumed by MDA and converted into the right to receive a combination of cash and a number of MDA common shares, each of which will be calculated as described in the section entitled “The Merger Proposal—Interests of DigitalGlobe’s Directors and Executive Officers in the Merger—Treatment of DigitalGlobe Equity Awards” below. MDA will assume such awards. The cash portion of the consideration for such awards will be fully vested at the effective time. The portion of such consideration in the form of MDA common shares will otherwise remain subject to substantially the same vesting and other terms and conditions as were applicable to such restricted stock unit immediately before the effective time. Assuming that the merger was completed on May 25, 2017, the estimated aggregate amount that would be payable to DigitalGlobe’s executive officers as a group for their DigitalGlobe unvested time-based restricted stock units is $6,663,755 in cash and 119,262 MDA common shares, and the estimated aggregate amount that would be payable to DigitalGlobe’s non-employee directors as a group for their DigitalGlobe unvested time-based restricted stock units is $111,458 in cash and 1,995 MDA common shares.

 

   

Each of DigitalGlobe’s executive officers is party to either an employment agreement or severance protection agreement that provides for severance benefits in the event of certain qualifying terminations of employment. In addition, the award agreement for each DigitalGlobe unvested time-

 



 

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based restricted stock unit provides for accelerated vesting in the event of certain qualifying terminations of service or employment. The estimated aggregate amount that would be payable to DigitalGlobe’s executive officers as a group under their respective employment agreement and severance protection agreements, assuming that the merger was completed on May 25, 2017 and their employment was terminated on that date in circumstances entitling them to severance benefits under their arrangements, is approximately $10,473,000 (not including the value of accelerated equity awards as disclosed above and below). These amounts are determined using the assumptions set forth in the section entitled “The Merger Proposal—Interests of DigitalGlobe’s Directors and Executive Officers in the MergerQuantification of Payments and Benefits to DigitalGlobe’s Named Executive Officers” below. In addition, if the employment or service, as the case may be, of DigitalGlobe’s executive officers and non-employee directors was terminated at that time under circumstances entitling them to severance benefits under their respective employment and severance protection agreements, or pursuant to the terms of the applicable award, then the MDA common shares payable with respect to the DigitalGlobe unvested time-based restricted stock units held by the executive officers and non-employee directors, as described above, would also vest at that time.

 

    Under the merger agreement, DigitalGlobe’s directors and executive officers are entitled to continued indemnification and insurance coverage, and “gross up” payments in the event Section 7874 of the Code applies in connection with the merger and, as a result, any excise tax is payable by any of DigitalGlobe’s directors and executive officers pursuant to Section 4985 of the Code (which we refer to as “Section 4985”).

 

    Under the merger agreement, three members of the DigitalGlobe board of directors will be appointed to the MDA board of directors and two members of the DigitalGlobe board of directors will be appointed to the Holdings board of directors.

These interests are discussed in more detail in the section entitled “The Merger Proposal—Interests of DigitalGlobe’s Directors and Executive Officers in the Merger.” The DigitalGlobe board of directors was aware of the different or additional interests described herein and considered these interests along with other matters in approving and recommending adoption of the merger agreement.

 



 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus and the other documents incorporated by reference into this proxy statement/prospectus contain or may contain “forward-looking statements” or “forward-looking information” under applicable securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking terms such as “may,” “will,” “could,” “should,” “would,” “plan,” “potential,” “intend,” “anticipate,” “project,” “target,” “believe,” “estimate” or “expect” and other words, terms and phrases of similar nature are often intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are statements which are not historical fact and involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties. Such forward-looking statements may include, but are not limited to, statements related to:

 

    the merger and the expected timing and satisfaction of conditions precedent to the closing of the merger, including among others, shareholder approvals of both MDA and DigitalGlobe, regulatory and governmental approvals and other customary closing conditions;

 

    the expectation that MDA will finance the cash consideration and the merger-related expenses through the incurrence of debt as contemplated in the debt commitment letter entered into by MDA in connection with the execution of the merger agreement;

 

    the impact of the merger on MDA’s earnings, credit rating, estimated enterprise value and growth rate;

 

    the expectation that MDA will become an SEC registrant and have its common shares listed on the NYSE or NASDAQ in connection with the merger;

 

    the expected strategic and integration opportunities and other synergies from the merger and the expected financial and other benefits therefrom;

 

    the future composition of MDA’s management team and directors and those of its subsidiaries;

 

    the future growth opportunities, expected earnings, expected capital expenditures, future financing requirements and estimated future dividends;

 

    the expectation that MDA and its subsidiaries will remain compliant with debt covenants and other contractual obligations; and

 

    the expected timeline for MDA to fully implement its plan to domicile the ultimate parent of DigitalGlobe in the United States by the end of 2019 and the expected benefits therefrom.

Forward-looking statements in this proxy statement/prospectus are based on certain key expectations and assumptions made by MDA and DigitalGlobe. Although the management of each of MDA and DigitalGlobe believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because MDA and DigitalGlobe can give no assurance that they will prove to be correct. Additionally, forward-looking statements are subject to various risks and uncertainties which could cause actual results and experience to differ materially from the anticipated results or expectations expressed in this proxy statement/prospectus. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, without limitation, the risks and uncertainties set forth under the section entitled “Risk Factors,” which are incorporated herein by reference. Some of the key risks and uncertainties include statements related to:

 

    changes in government priorities, mandates, policies, funding levels, contracts, laws and regulations, including the grant and maintenance of security clearances, loss or reduction in scope of any of MDA’s or DigitalGlobe’s contracts, or decisions by customers not to exercise renewal options;

 

    growth in the businesses of MDA’s and DigitalGlobe’s customers and the ability of MDA’s or DigitalGlobe’s customers to develop new services;

 

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    inherent risks of performance on firm fixed price construction contracts and termination of contracts by customers for convenience;

 

    decrease in demand for MDA’s or DigitalGlobe’s products and services;

 

    failure to maintain technological advances and offer new products to retain customers and market position;

 

    reliance on a limited number of vendors to provide certain key products or services;

 

    breach of MDA’s or DigitalGlobe’s system security measures or loss of Holdings’, a subsidiary of Holdings’ or DigitalGlobe’s secure facility clearance and accreditation;

 

    the loss or damage to MDA’s or DigitalGlobe’s satellites and/or partial or complete satellite failure;

 

    delays in the construction and launch of any of MDA’s or DigitalGlobe’s customers’ satellites;

 

    the achievement of performance criteria and continued performance of MDA’s or DigitalGlobe’s customers’ satellites;

 

    potential for product liability or the occurrence of defects in products or systems and resulting loss of revenue and harm to MDA’s or DigitalGlobe’s reputation;

 

    detrimental reliance on third parties for data;

 

    increased competition that may reduce MDA’s or DigitalGlobe’s market share or cause MDA or DigitalGlobe to lower its prices;

 

    changes in political or economic conditions, including fluctuations in the value of foreign currencies, interest rates, energy and commodity prices, trade laws and the effects of governmental initiatives to manage economic conditions;

 

    general business and economic conditions in Canada, the U.S. and other countries in which MDA or DigitalGlobe conduct business;

 

    MDA’s or DigitalGlobe’s ability to recruit, hire or retain key employees or a highly skilled and diverse workforce and the potential for work stoppages;

 

    failure to obtain or maintain required regulatory approvals and licenses;

 

    failure to comply with environmental regulations;

 

    changes in U.S., Canadian or foreign law or regulation that may limit MDA’s or DigitalGlobe’s ability to distribute products and services;

 

    changes in U.S., Canadian or foreign tax laws;

 

    failure of third party subcontractors to complete contracts;

 

    changes in estimates of total revenues and costs on contracts;

 

    quality issues and failure of systems to meet performance requirements;

 

    failure of MDA or DigitalGlobe to manage contracts, indemnities and related risks;

 

    dependence on electronic systems and data and system security threats;

 

    potential infringement of the intellectual property rights of others and inadequate protection of MDA’s or DigitalGlobe’s intellectual property rights;

 

    insufficient insurance against material claims or losses; and

 

    exposure to fines and/or legal sanctions under any laws.

 

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Additionally, there are also key risks and uncertainties that are inherent in the nature of the merger, including:

 

    fluctuation in value of the merger consideration;

 

    the impact of the announcement and pendency of the merger on MDA’s and DigitalGlobe’s businesses, results of operations, and financial conditions;

 

    the risks related to MDA and DigitalGlobe being restricted in their business activities while the merger agreement is in effect;

 

    risks regarding the integration of the two companies and that not all anticipated synergies or cost savings will be fully realized;

 

    success in retaining the services of executives, key personnel and other employees that MDA needs to realize all of the anticipated benefits of the merger; and

 

    failure to obtain required shareholder, regulatory, stock exchange and other third party approvals in a timely manner or on conditions acceptable to the parties or the failure to satisfy other customary closing conditions or the failure of the merger to be completed for any other reason (or to be completed in a timely manner).

The foregoing lists are not intended to be exhaustive and there may be other key risks that are not listed above that are not presently known to MDA or that MDA currently deems immaterial. Should one or more of these or other risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those expressed or implied by the forward-looking statements contained in this proxy statement/prospectus. As a result of the foregoing, readers should not place undue reliance on the forward-looking statements contained in this proxy statement/prospectus.

The forward-looking statements contained in this proxy statement/prospectus are expressly qualified in their entirety by the foregoing cautionary statements. All such forward-looking statements are based upon data available as of the date of this proxy statement/prospectus or other specified date and speak only as of such date. Each of MDA and DigitalGlobe disclaims any intention or obligation to update or revise any forward-looking statements in this proxy statement/prospectus as a result of new information or future events, except as may be required under applicable securities law.

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF DIGITALGLOBE

The following selected historical consolidated financial data prepared in accordance with U.S. GAAP is derived from (1) DigitalGlobe’s audited consolidated financial statements for the years ended December 31, 2016 and 2015 and DigitalGlobe’s consolidated financial statements for the years ended December 31, 2014, 2013 and 2012 and (2) DigitalGlobe’s unaudited consolidated financial statements for the three months ended March 31, 2017 and 2016. The information set forth below is only a summary that you should read together with the historical audited consolidated financial statements of DigitalGlobe and the related notes, as well as the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in DigitalGlobe’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and Quarterly Report on Form 10-Q for the three months ended March 31, 2017, that DigitalGlobe previously filed with the SEC and that are incorporated by reference into this proxy statement/prospectus. Historical results are not necessarily indicative of any results to be expected in the future. For more information, see the section entitled “Where You Can Find Additional Information.”

Summary Financial Data

 

    For the Three Months
Ended March 31,
    For the Year Ended December 31,  
(U.S. dollars in millions; except per-share amounts)   2017     2016     2016     2015     2014     2013(1)     2012  

Revenue

  $ 209.7     $ 175.4     $ 725.4     $ 702.4     $ 654.6       612.7     $ 421.4  

Income (loss) from operations

    5.5       20.6       102.1       60.8       31.9       (84.8     76.0  

Net (loss) income

    (2.2     8.6     26.5       23.3       18.5       (68.3     39.0  

Net (loss) income available to common shareholders

    (3.2     7.3       21.5       18.5       13.9     (71.9     39.0  

(Loss) earnings per share

             

Basic

  $ (0.05   $ 0.11     $ 0.34     $ 0.26     $ 0.19     $ (1.00   $ 0.85  

Diluted

  $ (0.05   $ 0.11     $ 0.34     $ 0.26     $ 0.18     $ (1.00   $  0.84  

Total Assets(3)(4)

    2,936.6       2,842.2       3,009.9       2,913.2       3,047.1       3,131.6       1,533.3  

Long-term debt, including current portion(4)

    1,252.9       1,109.9       1,289.3       1,109.9       1,113.6       1,114.3       483.3  

Other long-term obligations(2)(3)

    157.4       131.3       158.8       122.6       87.3       76.9       14.4  

Stockholders’ equity

    1,173.8       1,195.3       1,172.9       1,248.1       1,353.5       1,383.3       539.4  

 

(1) On January 31, 2013, DigitalGlobe completed its acquisition of 100% of the outstanding common stock of GeoEye, Inc., a provider of geospatial intelligence solutions. The results of GeoEye Inc.’s operations were included in DigitalGlobe’s consolidated financial statements beginning on the acquisition date.
(2) Other long-term obligations include deferred income taxes, net and other liabilities.
(3) Amounts differ from prior year presentation due to DigitalGlobe’s adoption of ASU 2015 – 17, Balance Sheet Classification of Deferred Taxes. For further detail, refer to Note 2, “Summary of Significant Accounting Policies and Recent Accounting Pronouncements,” of the Notes to the Consolidated Financial Statements included in Item 8 of DigitalGlobe’s Form 10-K for the fiscal year 2016 filed with the SEC on February 27, 2017.
(4) Amounts differ from prior year presentation due to DigitalGlobe’s adoption in 2015 of ASU 2015 – 03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented as a direct deduction from the associated debt liability.

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF MDA

The following tables present selected historical consolidated financial data for MDA as of and for the three months ended March 2017 and 2016 and for the years ended December 31, 2016, 2015, 2014, 2013 and 2012. The balance sheet data as of December 31, 2016 and 2015, the statement of earnings data and the statements of cash flows data for the years ended December 31, 2016, 2015 and 2014 have been derived from MDA’s audited historical consolidated financial statements, which were audited by KPMG LLP, an independent registered public accounting firm, and which are included elsewhere in this proxy statement/prospectus. The balance sheet data as of December 31, 2014, 2013 and 2012, the statement of earnings data and the statements of cash flows data for the years ended December 31, 2013 and 2012 have been derived from MDA’s audited historical consolidated financial statements not included in this proxy statement/prospectus. The balance sheet data as of March 31, 2017 and the statement of cash flows for the three months ended March 31, 2017 and 2016 have been derived from MDA’s unaudited consolidated financial statements, which are included elsewhere in this proxy statement/prospectus.

You should read the following summary consolidated financial and other data in conjunction with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of MDA” and MDA’s consolidated financial statements and related notes included elsewhere in this proxy statement/prospectus. Historical results are not necessarily indicative of future results. MDA’s financial statements have been prepared in accordance with IFRS.

Consolidated Statement of Earnings Data:

 

     Three months ended
March 31,
    Year Ended December 31,  
         2017             2016         2016     2015     2014     2013     2012  
     (in millions of Canadian dollars, except per share amounts)  

Revenue

   $ 494.3     $ 562.4     $ 2,063.8     $ 2,117.4     $ 2,098.8     $ 1,819.0     $ 879.9  

Expenses:

              

Direct costs, selling, general and administration

     410.6       468.2       1,708.6       1,754.3       1,737.7       1,505.3       679.3  

Depreciation and amortization

     25.1       26.0       102.6       99.6       82.3       76.9       23.8  

Foreign exchange loss (gain)

     (0.2     (2.5     4.7       3.6       11.4       14.3       (5.6

Share-based compensation expense

     6.5       3.9       19.3       14.1       49.4       80.2       25.2  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income

     52.3       66.8       228.6       245.8       218.0       142.3       157.2  

Other (income) expenses net

     25.0       4.8       7.8       12.9       99.3       (35.3     17.2  

Finance charges (net)

     14.0       12.9       49.4       46.4       34.1       49.1       10.5  

Income tax expense

     7.5       8.4       31.8       43.7       37.5       23.5       45.6  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings (attributed to common equity shareholders)

     5.9       40.7       139.6       142.8       47.1       105.0       83.9  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share

              

Basic

   $ 0.16     $ 1.12     $ 3.84     $ 3.94     $ 1.31     $ 3.00     $ 2.63  

Diluted

     0.15       1.10       3.74       3.84       1.31       3.00       2.63  

Dividends declared per common share

     0.37       0.37       1.48       1.48       1.30       1.30       1.30  

 

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Consolidated Balance Sheet Data:

 

     As of March 31,      As of December 31,  
     2017      2016     2015     2014     2013     2012  
     (in millions of Canadian dollars)  

Total current assets

     831.3      $ 901.8     $ 1,065.0     $ 858.0     $ 724.2     $ 635.9  

Total assets

     3,367.4        3,438.9       3,611.0       2,981.4       2,584.2       2,362.4  

Total current liabilities

     786.9        1,046.4       1,090.9       1,086.6       1,024.8       912.6  

Working capital (deficit)

     44.4        (144.6     (25.9     (228.6     (300.6     (276.7

Long-term debt, (excluding current portion)

     877.2        669.8       983.6       713.1       522.9       799.5  

Total shareholders’ equity

     1,145.2        1,158.7       1,107.7       804.0       796.2       266.8  

Consolidated Statements of Cash Flows:

 

     Three months ended
March 31,
    Year Ended December 31,  
      2017       2016      2016     2015     2014     2013     2012  
     (in millions of Canadian dollars)  

Net cash provided by (used in):

              

Operating activities

     (25.2     (0.2   $ 172.8     $ 135.2     $ 78.2     $ 152.4     $ 147.4  

Investing activities

     (33.0     (24.3     (132.3     (105.5     (135.8     (30.8     (925.0

Financing activities

     49.5       5.9       (84.2     (11.7     21.6       (94.7     583.2  

Capital expenditures (included in investing activities above)

     (34.1     24.2       (133.4     (80.4     (92.7     (63.3     (25.0

 

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SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

The following selected unaudited pro forma combined financial data gives effect to the merger, for purposes of the unaudited pro forma condensed combined balance sheet data as if it had occurred on March 31, 2017, and for purposes of the unaudited pro forma condensed combined statement of earnings data as if the merger had occurred on January 1, 2016. The selected unaudited pro forma combined financial data have been derived from, and should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial statements included elsewhere in this proxy statement/prospectus. In addition, the unaudited pro forma condensed combined financial statements should be read in conjunction with: (i) the historical unaudited condensed consolidated and historical audited consolidated financial statements of MDA for the three months ended March 31, 2017 and as at and for the year ended December 31, 2016, respectively, and the related notes thereto and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of MDA” contained elsewhere in this proxy statement/prospectus for three months ended March 31, 2017 and the year ended December 31, 2016, respectively, and (ii) the historical unaudited condensed consolidated and historical audited consolidated financial statements of DigitalGlobe for the three months ended March 31, 2017 and as of and for the year ended December 31, 2016, respectively, and the related notes thereto and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in DigitalGlobe’s quarterly report on Form 10-Q for the three months ended March 31, 2017 and annual report on Form 10-K for the year ended December 31, 2016, respectively, and incorporated by reference into this proxy statement/prospectus.

The selected unaudited pro forma combined financial data have been prepared for illustrative purposes only and are not necessarily indicative of the operating results or financial condition that would have been achieved if the merger had been completed on the dates or for the periods presented, nor do they purport to project the results of operations or financial position of the combined entities for any future period or as of any future date. The selected pro forma combined financial data may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts presented. Also, as explained in more detail in the accompanying notes to the unaudited pro forma condensed combined financial statements, the preliminary fair values of assets acquired and liabilities assumed reflected in the selected pro forma combined financial data are subject to adjustment and may vary materially from the fair values that will be recorded upon completion of the merger. Similarly, the pro forma adjustments are preliminary, and may differ from the actual adjustments to the consolidated financial statements of MDA upon the closing of the merger.

 

     Three months
ended March 31,
2017
     Year ended
December 31,
2016
 
     (C$ millions)      (C$ millions)  

Pro forma combined statement of earnings data

     

IFRS measures:

     

Consolidated revenues

     785.1        3,079.3  

Earnings before interest and taxes

     73.0        349.9  

Net earnings

     3.0        82.2  

Diluted earnings per share

     0.05        1.42  

Non-IFRS measures:

     

Adjusted operating EBITDA

     245.8        994.4  

Adjusted operating earnings

     97.0        397.9  

Adjusted operating earnings per share

     1.67        6.86  

 

     As at
March 31, 2017
 
     (C$ millions)  

Pro forma combined balance sheet data

  

Total assets

     8,650.9  

Total long-term debt (including current portion)

     4,207.7  

Total shareholders’ equity

     2,336.5  

 

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Non-IFRS measures

In addition to results reported in accordance with IFRS, MDA uses certain non-IFRS financial measures as supplemental indicators of its financial and operating performance. These non-IFRS financial measures include adjusted operating earnings, adjusted operating earnings per share and adjusted operating EBITDA. MDA believes these supplementary financial measures reflect MDA’s ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in its business.

MDA defines operating earnings as net earnings excluding the impact of specified items affecting comparability, including, where applicable, non-operational income and expenses, amortization of acquisition related intangible assets, share-based compensation, and other gains and losses. The use of the term “non-operational income and expenses” is defined by MDA as those items or income and expenses that do not impact operating decisions taken by MDA’s management and is based upon the way MDA’s management evaluates the performance of MDA’s business for use in MDA’s internal management reports. For the pro forma financial results, adjusted operating earnings also excludes the impact of specified items from DigitalGlobe’s net earnings including stock-based compensation expense, certain restructuring and re-engineering costs (classified as enterprise improvement costs in the tables below), joint venture losses, acquisition costs and loss from extinguishment of debt. Income tax expense on adjusted operating earnings is computed using the substantively enacted income tax rate, adjusted to account for the specified items affecting comparability such as non-deductible expenses and the recognition of deferred tax assets. Adjusted operating earnings per share is calculated using diluted weighted average shares outstanding and does not represent actual earnings per share attributable to shareholders.

MDA defines adjusted operating EBITDA as earnings before interest, taxes, depreciation and amortization, and adjusted for certain corporate expenses and items affecting comparability as specified in the calculation of adjusted operating earnings. Adjusted operating EBITDA is presented on a basis consistent with MDA’s internal management reports. MDA discloses adjusted operating EBITDA to capture the profitability of its business before the impact of items not considered in management’s evaluation of operating unit performance.

Adjusted operating earnings, adjusted operating earnings per share and adjusted operating EBITDA do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. MDA cautions readers to consider these non-IFRS financial measures in addition to, and not as an alternative for, measures calculated in accordance with IFRS.

The following table reconciles, on a pro forma basis, net earnings to adjusted operating earnings for the three months ended March 31, 2017 and for the fiscal year ended December 31, 2016:

 

     Three months
ended March 31,
2017
     Year ended
December 31,
2016
 
     (C$ millions)  

Net earnings

     3.0        82.2  

Share-based compensation expense

     15.2        44.5  

Amortization of acquisition related intangible assets

     65.0        248.9  

Restructuring costs

     14.7        8.8  

Enterprise improvement costs

     —          12.4  

Acquisition related expense

     0.1        1.3  

Executive compensation settlement

     —          3.0  

Foreign exchange differences

     (0.1      3.7  

Joint venture losses

     —          5.1  

Loss from extinguishment of debt

     0.7        47.6  

Income tax expense adjustment

     (1.6      (59.6
  

 

 

    

 

 

 

Adjusted operating earnings

     97.0        397.9  
  

 

 

    

 

 

 

Diluted adjusted operating earnings per share

     1.67        6.86  
  

 

 

    

 

 

 

 

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The following table reconciles, on a pro forma basis, net earnings to EBITDA and adjusted operating EBITDA for the three months ended March 31, 2017 and for the fiscal year ended December 31, 2016:

 

     Three months
ended March 31,
2017
     Year ended
December 31,
2016
 

Net earnings

     3.0        82.2  

Depreciation and amortization

     133.2        536.7  

Net finance expense

     61.3        195.7  

Income tax expense

     8.0        19.2  
  

 

 

    

 

 

 

EBITDA

     205.5        833.8  

Corporate expense

     9.7        34.2  

Share-based compensation expense

     15.2        44.5  

Restructuring costs

     14.7        8.8  

Enterprise improvement costs

     —          12.4  

Acquisition related expense

     0.1        1.3  

Executive compensation settlement

     —          3.0  

Foreign exchange differences

     (0.1      3.7  

Joint venture losses

     —          5.1  

Loss from extinguishment of debt

     0.7        47.6  
  

 

 

    

 

 

 

Adjusted operating EBITDA

     245.8        994.4  
  

 

 

    

 

 

 

 

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COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

MDA common shares are currently listed on the TSX under the symbol “MDA” and DigitalGlobe common stock is currently listed on the NYSE under the ticker symbol “DGI.”

The table below sets forth, for the periods indicated, the per share high and low sales prices for MDA common shares as reported on the TSX and for DigitalGlobe common stock as reported on the NYSE.

 

     MDA Common
Shares TSX
     DGI Common
Stock NYSE
 
     High      Low      High      Low  
     (in C$)      (in US$)  

Annual information for the past five calendar years

           

2016

     92.92        64.04        33.05        11.80  

2015

     101.42        70.55        35.91        12.41  

2014

     95.63        74.66        43.13        23.85  

2013

     85.30        55.41        42.42        24.62  

2012

     61.74        39.64        27.00        11.61  

Quarterly information for the past two years and subsequent quarters

           

2017

           

First Quarter

     75.58        63.52        35.95        27.60  

2016

           

Fourth Quarter

     80.28        64.04        33.05        23.95  

Third Quarter

     90.23        79.26        28.33        20.85  

Second Quarter

     92.92        80.64        23.20        16.58  

First Quarter

     91.55        80.47        18.21        11.80  

2015

           

Fourth Quarter

     86.77        71.61        22.22        12.41  

Third Quarter

     91.71        70.55        28.32        17.78  

Second Quarter

     100.63        89.83        35.70        27.59  

First Quarter

     101.42        89.86        35.91        26.85  

Monthly information for the most recent six months

           

June 2017*

     64.16        62.03        32.25        31.10  

May 2017

     67.00        61.44        32.50        30.80  

April 2017

     71.68        67.11        33.80        32.00  

March 2017

     71.05        64.92        32.90        31.30  

February 2017

     75.03        63.52        35.95        27.95  

January 2017

     75.58        66.05        30.40        27.60  

December 2016

     70.40        64.04        32.70        28.45  

 

* Through June 16, 2017.

The above table shows only historical data. The data may not provide meaningful information to DigitalGlobe shareowners in determining whether to approve the merger. DigitalGlobe shareowners are urged to obtain current market quotations for DigitalGlobe common stock and to review carefully the other information contained in, or incorporated by reference into, this proxy statement/prospectus, when considering whether to approve the merger. See the section entitled “Where You Can Find Additional Information” for further information.

The following table presents the closing price per share of MDA common shares on the TSX and of DigitalGlobe common stock on the NYSE on (a) February 16, 2017, the last full trading day prior to media reports that DigitalGlobe and MDA were in merger discussions, (b) February 23, 2017, the last trading day prior to the date of public announcement of the execution of the merger agreement and (c) June 16, 2017, the last

 

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practicable trading day prior to the mailing of this proxy statement/prospectus. This table also shows the implied value of the merger consideration payable for each share of DigitalGlobe common stock on the relevant date. The implied value of the merger consideration represents the sum of US $17.50, the cash portion of the merger consideration, plus the stock portion of the merger consideration, based upon the product of the exchange ratio of 0.3132 and the closing price of MDA common shares on the TSX as of the applicable date (converted to U.S. dollars based on the Bank of Canada’s closing Canadian dollar-to-U.S. dollar exchange rate on the applicable date except as otherwise noted).

 

Date

   MDA Common
Shares
TSX
     DGI Common
Stock
NYSE
     Implied per share
value of merger
consideration
 
     (C$)      (US$)      (US$)  

February 16, 2017

   $ 73.40      $ 29.60      $ 35.00 (1) 

February 23, 2017

   $ 69.00      $ 34.05      $ 33.98  

June 16, 2017

   $ 62.78      $ 31.55      $ 32.36  

 

(1) Converted to U.S. dollars based on the Bank of Canada’s closing Canadian dollar-to-U.S. dollar exchange rate on February 21, 2017.

DigitalGlobe shareowners will not receive the merger consideration until the merger is completed, which may be a substantial period of time after the special meeting. There can be no assurance as to the trading prices of MDA common shares at the time of the closing of the merger. The market prices of MDA common shares and DigitalGlobe common stock and the Canadian dollar-to-U.S. dollar exchange rate are likely to fluctuate prior to consummation of the merger and cannot be predicted. We urge you to obtain current market quotations for both MDA common shares and DigitalGlobe common stock and the Canadian dollar-to-U.S. dollar exchange rate.

The table below sets forth the dividends declared per MDA common share and the dividends declared per share of DigitalGlobe common stock for the periods indicated.

 

     MDA      DGI(1)  
     (C$)      (US$)  

Three Months Ended June 30, 2017

     0.37        0.00  

Three Months Ended March 31, 2017

     0.37        0.00  

Year Ended December 31,

     

2016

     1.48        0.00  

2015

     1.48        0.00  

2014

     1.30        0.00  

2013

     1.30        0.00  

2012

     1.30        0.00  

 

(1) DigitalGlobe has not declared or paid any cash dividends on its common stock since inception.

 

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UNAUDITED COMPARATIVE PER SHARE DATA

The following tables present, as of the dates and for the periods indicated, selected historical unaudited pro forma condensed combined financial information per share of MDA common shares and DigitalGlobe common stock. You should read this information in conjunction with, and the information is qualified in its entirety by (a) the consolidated financial statements of MDA and notes thereto included elsewhere in this proxy statement/prospectus, (b) the consolidated financial statements of DigitalGlobe and notes thereto incorporated by reference into this proxy statement/prospectus, and (c) the financial information contained in the “Unaudited Pro Forma Condensed Combined Financial Statements” and notes thereto included elsewhere in this proxy statement/prospectus. For information about the filings incorporated by reference in this proxy statement/prospectus, see the section entitled “Where You Can Find Additional Information.”

The following pro forma information has been prepared in accordance with IFRS. It does not reflect cost savings, synergies or certain other adjustments that may result from the merger. This information is presented for illustrative purposes only. You should not rely on the pro forma combined or equivalent pro forma amounts as they are not necessarily indicative of the operating results or financial position that would have occurred if the merger had been completed as of the dates indicated, nor are they necessarily indicative of the future operating results or financial position of the combined company. The pro forma information, although helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the benefits of expected cost savings, opportunities to earn additional revenue, the impact of restructuring and merger-related costs, or other factors that may result as a consequence of the merger and, accordingly, does not attempt to predict or suggest future results.

The following tables assume the issuance of approximately 21.5 million MDA common shares in connection with the merger, which is the number of shares issuable by MDA in connection with the merger assuming the merger was completed on May 25, 2017. As discussed in this proxy statement/prospectus, the actual number of MDA common shares issuable in the merger will be adjusted based on the number of shares of DigitalGlobe common stock, shares of DigitalGlobe preferred stock, DigitalGlobe options and DigitalGlobe RSUs outstanding immediately prior to the effective time. The pro forma data in the tables assume that the merger occurred on January 1, 2016 for income statement purposes and on March 31, 2017 for balance sheet purposes, and that the merger is accounted for as a business combination applying the acquisition method of accounting with MDA as the acquirer.

 

MDA COMMON SHARES

   Three Months Ended
March 31, 2017
(C$)
     Year Ended
December 31, 2016

(C$)
 

Basic earnings per common share

     

Historical

   $ 0.16      $ 3.84  

Pro forma combined

   $ 0.05      $ 1.42  

Diluted earnings per common share

     

Historical

   $ 0.15      $ 3.74  

Pro forma combined

   $ 0.05      $ 1.36  

Dividends per common share

     

Historical

   $ 0.37      $ 1.48  

Pro forma combined

   $ 0.37      $ 1.48  

Book value per common share at period end

     

Historical

   $ 31.45      $ 31.85  

Pro forma combined

   $ 40.35      $ 43.02  

The unaudited equivalent pro forma per share combined information for DigitalGlobe set forth below shows the effect of the merger from the perspective of a DigitalGlobe shareowner. The information was calculated by multiplying the unaudited pro forma combined per share data for MDA common shares (converted into U.S. dollars using the Bank of Canada’s annual average Canadian dollar-to-U.S. dollar exchange rate for the year

 

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ended December 31, 2016 and average Canadian dollar-to-U.S. dollar exchange rate for the three months ended March 31, 2017, except for book value per common share, converted into U.S. dollars using the Bank of Canada’s closing Canadian dollar-to-U.S. dollar exchange rate on March 31, 2017 and December 30, 2016) by the exchange ratio of 0.3132. The exchange ratio does not include the US $17.50 in cash portion of the merger consideration.

 

DIGITALGLOBE COMMON STOCK

   Three Months Ended
March 31, 2017
(US$)
     Year Ended
December 31, 2016
(US$)
 

Basic earnings per common share

     

Historical

   $ (0.05    $ 0.34  

Equivalent pro forma combined

   $ 0.01      $ 0.34  

Diluted earnings per common share

     

Historical

   $ (0.05    $ 0.34  

Equivalent pro forma combined

   $ 0.01      $ 0.32  

Dividends per common share

     

Historical

   $ 0.00      $ 0.00  

Equivalent pro forma combined

   $ 0.09      $ 0.35  

Book value per common share at period end

     

Historical

   $ 18.93      $ 19.10  

Equivalent pro forma combined

   $ 9.49      $ 10.04  

 

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RISK FACTORS

You should consider carefully the following risk factors, as well as the other information set forth in and incorporated by reference into this proxy statement/prospectus, before making a decision on the merger proposal or the other proposals presented. As a MDA shareholder following completion of the merger, you will be subject to all risks inherent in the business of MDA in addition to the risks relating to DigitalGlobe. The market value of your MDA common shares will reflect the performance of the business relative to, among other things, that of the competitors of MDA and DigitalGlobe and general economic, market and industry conditions. The value of your investment may increase or may decline and could result in a loss. You should carefully consider the following factors as well as the other information contained in and incorporated by reference into this proxy statement/prospectus. For information about the filings incorporated by reference in this proxy statement/prospectus, see the section entitled “Where You Can Find Additional Information.”

Risks Relating to the Merger

Because the market value of MDA common shares that DigitalGlobe shareowners will receive in the merger may fluctuate, DigitalGlobe shareowners cannot be sure of the market value of the stock portion of the consideration that they will receive in the merger.

The stock portion of the merger consideration that DigitalGlobe shareowners will receive upon completion of the merger is a fixed number of MDA common shares, not a number of shares that will be determined based on a fixed market value. The market value of MDA common shares, the exchange rate between the Canadian dollar and the U.S. dollar and the market value of the common stock of DigitalGlobe at the effective time may vary significantly from their respective values on the date that the merger agreement was executed or at other dates, such as the date of this proxy statement/prospectus or the date of the special meeting. Stock price changes may result from a variety of factors, including, among others, changes in MDA’s or DigitalGlobe’s respective businesses, operations or prospects, regulatory considerations, and general business, market, industry or economic conditions. The exchange ratio relating to the stock portion of the merger consideration will not be adjusted to reflect any changes in the market value of MDA common shares, the comparative value of the Canadian dollar and U.S. dollar or market value of the DigitalGlobe common stock. Therefore, the aggregate market value of the MDA common shares that a DigitalGlobe shareowner is entitled to receive at the time that the merger is completed could vary significantly from the value of such shares on the date of this proxy statement/prospectus or the date of the special meeting and, at the time of the special meeting, DigitalGlobe shareowners will not necessarily know or be able to calculate the total value of the merger consideration they would receive upon completion of the merger. Neither DigitalGlobe nor MDA is permitted to terminate the merger agreement solely because of changes in currency exchange rates or in the market prices of either shares of DigitalGlobe common stock or MDA common shares.

Upon completion of the merger, DigitalGlobe shareowners will become MDA shareholders, and the market price for MDA common shares may be affected by factors different from those that historically have affected DigitalGlobe.

Upon completion of the merger, DigitalGlobe shareowners will become MDA shareholders. MDA’s businesses differ from those of DigitalGlobe, and accordingly, the results of operations of MDA will be affected by some factors that are different from those currently affecting the results of operations of DigitalGlobe. The market price of MDA common shares may fluctuate significantly following consummation of the merger and DigitalGlobe shareowners could lose the value of their investment in MDA common shares. In addition, the stock market has experienced significant price and volume fluctuations in recent times which could have a material adverse effect on the market for, or liquidity of, the MDA common shares, regardless of MDA’s actual operating performance. For a discussion of the business of MDA and of some important factors to consider in connection with MDA’s business, see the sections entitled “Additional Information about MDA” and “Risk Factors—Risks Related to MDA’s Business.” For a discussion of the business of DigitalGlobe and of some

 

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important factors to consider in connection with DigitalGlobe’s business, see the documents incorporated by reference in this proxy statement/prospectus and referred to in the section entitled “Where You Can Find Additional Information.

Certain rights of DigitalGlobe shareowners will change as a result of the merger.

Upon completion of the merger, DigitalGlobe shareowners will no longer be shareowners of DigitalGlobe, a Delaware corporation, but will be shareholders of MDA, a British Columbia corporation. There will be certain differences between your current rights as a DigitalGlobe shareowner, on the one hand, and the rights to which you will be entitled as a MDA shareholder, on the other hand. These differences include, but are not limited to the following:

 

    MDA is authorized to issue an unlimited number of common shares;

 

    voting at a meeting of shareholders may be conducted by a show of hands, without respect to the number of shares held by each such shareholder, unless a poll is directed by the chairperson or demanded by a shareholder entitled to vote;

 

    MDA’s articles provide that, subject to special rights and restrictions attached to any class or series of shares, a quorum of shareholders is constituted by two persons who are, or represent by proxy, shareholders holding at least 25% of the issued shares entitled to be voted;

 

    MDA has in place a Shareholders Rights Plan Agreement dated January 8, 2008 between MDA and Computershare Investor Services Inc., as rights agent; and

 

    as MDA is governed by the BCA rather than the DGCL, and MDA is not subject to an anti-takeover statute comparable to Section 203 of the DGCL, to which DigitalGlobe is subject.

For a more detailed discussion of the differences in the rights of DigitalGlobe shareowners and MDA shareholders, see the section entitled “Comparison of Rights of MDA Shareholders and DigitalGlobe shareowners.”

There is no assurance when or if the merger will be completed.

The completion of the merger is subject to the satisfaction or waiver of a number of conditions as set forth in the merger agreement, including, among others, (a) the approval and adoption of the merger agreement by the DigitalGlobe shareowners holding a majority in voting power of the outstanding shares of DigitalGlobe common stock and DigitalGlobe preferred stock (on an as-converted to DigitalGlobe common stock basis), voting together as a single class, and entitled to vote at the special meeting; (b) the approval of the issuance of MDA common shares in connection with the merger by a majority of the votes cast on such matter at the MDA meeting; (c) expiration or termination of the applicable waiting period under the HSR Act; (d) receipt of an approval from the CFIUS; (e) receipt of other regulatory approvals; (f) the absence of any law or action taken by any governmental entity of competent jurisdiction (whether temporary, preliminary or permanent) which restrains, precludes, enjoins or otherwise prohibits the consummation of the merger or makes the merger illegal; (g) the SEC declaring effective the registration statement on Form F-4 under the U.S. Securities Act of which this proxy statement/prospectus is a part; (h) the conditional approval or authorization, as applicable, for listing on the TSX and either the NYSE or NASDAQ of the MDA common shares issuable in connection with the merger; (i) receipt by each of MDA and DigitalGlobe of a tax opinion from an outside tax advisor or legal counsel regarding certain aspects of the transaction; (j) the accuracy of the representations and warranties contained in the merger agreement (subject to specified materiality qualifiers); (k) compliance with the covenants and agreements in the merger agreement in all material respects; and (l) no material adverse effect on either DigitalGlobe or MDA having occurred. The closing of the merger is not subject to a financing condition. There can be no assurance as to when these conditions will be satisfied or waived, if at all, or that other events will not intervene to delay or result in the failure to close the proposed merger.

 

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DigitalGlobe and MDA have made various filings and submissions and are pursuing all required consents, orders and approvals in accordance with the merger agreement. No assurance can be given that the required consents, orders and approvals will be obtained or that the required conditions to closing will be satisfied. Even if all such consents, orders and approvals are obtained and such conditions are satisfied, no assurance can be given as to the terms, conditions and timing of such consents, orders and approvals. For example, these consents, orders and approvals may impose conditions on or require divestitures relating to the divisions, operations or assets of DigitalGlobe and MDA or may impose requirements, limitations or costs or place restrictions on the conduct of DigitalGlobe’s or MDA’s business, and if such consents, orders and approvals require an extended period of time to be obtained, such extended period of time could increase the chance that an adverse event occurs with respect to DigitalGlobe or MDA. Such extended period of time also may increase the chance that other adverse effects with respect to DigitalGlobe or MDA could occur, such as the loss of key personnel. Under the merger agreement, neither MDA nor any of its subsidiaries (including Holdings and Merger Sub) will be required to, as a condition to obtaining any required approval or resolving any objection of any governmental entity, offer or accept, or agree, commit to agree or consent to, any “Extraordinary Condition,” as defined below under “The Merger Proposal—Regulatory Approvals Required for the Merger.” Each party’s obligation to complete the merger is also subject to the accuracy of the representations and warranties of the other party (subject to specified materiality qualifiers) and the performance in all material respects of the other party’s covenants under the merger agreement. In addition, if the merger is not completed by 5:00 p.m. Eastern Time on December 7, 2017, either DigitalGlobe or Holdings may choose to terminate the merger agreement. DigitalGlobe or Holdings may elect to terminate the merger agreement in certain other circumstances, and DigitalGlobe and MDA can mutually decide to terminate the merger agreement at any time prior to the effective time, before or after the approval by the DigitalGlobe shareowners or the MDA shareholders. As a result of these conditions, DigitalGlobe and MDA cannot provide assurance that the merger will be completed on the terms or timeline currently contemplated, or at all. For more information, see the sections entitled “The Merger Proposal—Regulatory Approvals Required for the Merger,” “The Merger Agreement—Conditions that Must Be Satisfied or Waived for the Merger to Occur” and “The Merger Agreement—Termination of the Merger Agreement.”

The special meeting may take place before all of the required regulatory approvals have been obtained and before all conditions to such approvals, if any, are known. Notwithstanding the foregoing, if the merger proposal is approved by DigitalGlobe shareowners, DigitalGlobe and MDA would not be required to seek further approval of DigitalGlobe shareowners, even if the conditions imposed in obtaining required regulatory approvals could have an adverse effect on DigitalGlobe or MDA either before or after completing the merger.

Following the closing of the merger, MDA may not realize all of the anticipated benefits of the merger.

MDA believes that the merger will provide benefits to MDA as described elsewhere in this proxy statement/prospectus. However, there is a risk that some or all of the expected benefits of the merger may fail to materialize, or may not occur within the time periods anticipated by MDA. The realization of such benefits may be affected by a number of factors, including tax and regulatory considerations and decisions, many of which are beyond the control of MDA and DigitalGlobe. The challenge of combining previously independent businesses makes evaluating the business and future financial prospects of MDA following the merger difficult. DigitalGlobe and MDA have operated and, until completion of the merger, will continue to operate, independently. The past financial performance of each of DigitalGlobe and MDA may not be indicative of their future financial performance. Realization of the anticipated benefits in the merger will depend, in part, on MDA’s ability to successfully integrate DigitalGlobe with MDA. The combined company will be required to devote significant management attention and resources to integrating its business practices and support functions. The diversion of management’s attention and any delays or difficulties encountered in connection with the merger and the coordination of the two companies’ operations could have an adverse effect on the business, financial results, financial condition or the share price of MDA following the merger. The coordination process may also result in additional and unforeseen expenses.

Failure to realize all of the anticipated benefits of the merger may impact the financial performance of MDA, the price of the MDA common shares and the ability of MDA to continue paying dividends on its

 

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common shares at rates consistent with current dividend guidance or at all. The declaration of dividends by MDA will be at the discretion of its board of directors, which may determine at any time to cease paying dividends, lower the dividend rate or not increase the dividend rate.

The announcement and pendency of the merger could adversely affect DigitalGlobe’s and MDA’s business, results of operations and financial condition.

The announcement and pendency of the merger could cause disruptions in and create uncertainty surrounding DigitalGlobe’s and MDA’s business, including affecting DigitalGlobe’s and MDA’s relationships with its existing and future customers, suppliers and employees, which could have an adverse effect on DigitalGlobe’s and MDA’s business, results of operations and financial condition, regardless of whether the merger is completed. In particular, DigitalGlobe and MDA could potentially lose important personnel as a result of the departure of employees who decide to pursue other opportunities in light of the merger. DigitalGlobe and MDA could also potentially lose customers or suppliers, and new customer or supplier contracts could be delayed or decreased. In addition, DigitalGlobe and MDA have expended, and continue to expend, significant management resources in an effort to complete the merger, which are being diverted from DigitalGlobe’s and MDA’s day-to-day operations.

If the merger is not completed, DigitalGlobe’s and MDA’s stock prices will likely fall to the extent that the current price of DigitalGlobe common stock and MDA common shares reflect a market assumption that the merger will be completed. In addition, the failure to complete the merger may result in negative publicity or a negative impression of DigitalGlobe and MDA in the investment community and may affect DigitalGlobe’s and MDA’s relationship with employees, customers, suppliers and other partners in the business community.

DigitalGlobe and MDA will incur substantial transaction fees and costs in connection with the merger.

DigitalGlobe and MDA have incurred and expect to incur additional material non-recurring expenses in connection with the merger and completion of the transactions contemplated by the merger agreement, including costs relating to the financing of the merger and obtaining required shareowner or shareholder, as applicable, and regulatory approvals. DigitalGlobe and MDA have incurred significant legal, advisory and financial services fees in connection with the process of negotiating and evaluating the terms of the merger. Additional significant unanticipated costs may be incurred in the course of coordinating the businesses of DigitalGlobe and MDA after completion of the merger. Even if the merger is not completed, DigitalGlobe and MDA will need to pay certain costs relating to the merger incurred prior to the date the merger was abandoned, such as legal, accounting, financial advisory, filing and printing fees. Such costs may be significant and could have an adverse effect on the parties’ future results of operations, cash flows and financial condition. In addition to its own fees and expenses, each of DigitalGlobe and MDA may be required to reimburse the other party for its reasonable out-of-pocket expenses incurred in connection with the merger agreement, subject to a cap of $10 million, in the event the DigitalGlobe shareowners or MDA shareholders, respectively, do not approve the matters required to be voted upon by DigitalGlobe shareowners or MDA shareholders, respectively, and the merger agreement is terminated.

MDA will have a substantial amount of indebtedness, which may adversely affect its cash flow and ability to operate its business.

After giving effect to the merger and the financing thereof, MDA will have a significant amount of debt. As of December 31, 2016, on a pro forma basis after giving effect to the merger and the financing plans in connection with the merger, as assumed in the unaudited pro forma condensed combined financial statements contained under the section entitled “Unaudited Pro Forma Condensed Combined Financial Information,” the consolidated indebtedness of MDA was estimated to be approximately C$4.13 billion. The expected substantial increase in the amount of indebtedness of MDA will, among other things, reduce MDA’s flexibility to respond to changing business and economic conditions and could increase MDA’s borrowing costs. In addition, the amount of cash required to service MDA’s increased indebtedness levels and thus the demands on MDA’s cash resources

 

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will be greater than the amount of cash flows required to service the indebtedness of MDA or DigitalGlobe individually prior to the merger. The increased levels of indebtedness could also reduce funds available for capital expenditures, the payment of dividends and other activities and may create competitive disadvantages for MDA relative to other companies with lower debt levels.

There can be no assurance that MDA will be able to secure the funds necessary to pay the cash portion of the merger consideration and refinance certain of DigitalGlobe’s existing indebtedness on acceptable terms, in a timely manner, or at all.

MDA intends to fund the cash portion of the merger consideration with debt financing, and also intends to refinance certain of DigitalGlobe’s existing indebtedness with debt financing. To this end, MDA has entered into the debt commitment letter for senior secured credit facilities in an aggregate principal amount of up to US$3.75 billion. However, neither MDA nor any of its subsidiaries has entered into definitive agreements for the debt financing (or any equity issuance or other financing arrangements in lieu thereof). There can be no assurance that MDA will be able to secure the debt financing pursuant to the debt commitment letter. In the event that the debt financing contemplated by the debt commitment letter is not available, other financing may not be available on acceptable terms, in a timely manner or at all. Although the merger agreement does not contain any financing conditions, if MDA is unable to secure financing for the merger, the merger may not be completed.

The definitive documentation governing the debt financing has not been finalized. However, it is expected that the definitive documentation governing the debt financing will contain various affirmative and negative covenants that impose restrictions on MDA and certain of its subsidiaries. In addition, such documentation is expected to contain financial covenants that will require MDA to maintain certain financial ratios. These covenants could limit the ability of MDA and certain subsidiaries thereof to finance their future operations and capital needs and their ability to pursue business opportunities and activities that may be in MDA’s interest. Failure to comply with these covenants could result in an event of default, which, if not cured or waived, could accelerate MDA’s repayment obligations. See the section entitled “The Merger Proposal—Financing for the Merger” for more information.

Significant demands will be placed on DigitalGlobe and MDA as a result of the merger.

As a result of the pursuit and completion of the merger, significant demands will be placed on the managerial, operational and financial personnel and systems of DigitalGlobe and MDA. The future operating results of MDA will be affected by the ability of its officers and key employees to manage changing business conditions and to implement and expand its operational and financial controls and reporting systems in response to the merger.

The unaudited pro forma condensed combined financial information of DigitalGlobe and MDA is presented for illustrative purposes only and may not be indicative of the results of operations or financial condition of MDA following the merger.

The unaudited pro forma condensed combined financial information included in this proxy statement/prospectus has been prepared using the consolidated historical financial statements of MDA and DigitalGlobe, is presented for illustrative purposes only and should not be considered to be an indication of the results of operations or financial condition of MDA following the merger. In addition, the pro forma combined financial information included in this proxy statement/prospectus is based in part on certain assumptions regarding the merger. These assumptions may not prove to be accurate, and other factors may affect MDA’s results of operations or financial condition following the merger. Accordingly, the historical and pro forma financial information included in this proxy statement/prospectus does not necessarily represent MDA’s results of operations and financial condition had DigitalGlobe and MDA operated as a combined entity during the periods presented, or of MDA’s results of operations and financial condition following completion of the merger. MDA’s

 

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potential for future business success and operating profitability must be considered in light of the risks, uncertainties, expenses and difficulties typically encountered by recently combined companies.

In preparing the pro forma financial information contained in this proxy statement/prospectus, MDA has given effect to, among other items, the completion of the merger, the payment of the merger consideration and the indebtedness of MDA on a consolidated basis after giving effect to the merger, including the indebtedness of DigitalGlobe. The unaudited pro forma financial information does not reflect all of the costs that are expected to be incurred by DigitalGlobe and MDA in connection with the merger. For more information, see the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements,” including the notes thereto.

MDA may not have discovered undisclosed liabilities of DigitalGlobe.

In the course of the due diligence review of DigitalGlobe that MDA conducted prior to the execution of the merger agreement, MDA may not have discovered, or may have been unable to quantify, undisclosed liabilities of DigitalGlobe and its subsidiaries and MDA will not be indemnified for any of these liabilities. If DigitalGlobe has undisclosed liabilities, MDA as a successor owner may be responsible for such undisclosed liabilities. Such undisclosed liabilities could have an adverse effect on the business, results of operations, financial condition and cash flows of MDA and on the value of the MDA common shares after the consummation of the merger.

DigitalGlobe may not have discovered undisclosed liabilities of MDA.

In the course of the due diligence review of MDA that DigitalGlobe conducted prior to the execution of the merger agreement, DigitalGlobe may not have discovered, or may have been unable to quantify, undisclosed liabilities of MDA and its subsidiaries and DigitalGlobe shareowners will not be indemnified for any of these liabilities. Such undisclosed liabilities could have an adverse effect on the business, results of operations, financial condition and cash flows of MDA and on the value of the MDA common shares after the consummation of the merger.

While the merger agreement is in effect, DigitalGlobe and MDA are subject to restrictions on their business activities.

Under the merger agreement, DigitalGlobe and MDA are subject to certain restrictions on the conduct of their business and generally must operate their business in the ordinary course prior to completing the merger (unless DigitalGlobe or MDA obtains the other’s consent, as applicable, which is not to be unreasonably withheld, conditioned or delayed), which may restrict DigitalGlobe’s and MDA’s ability to exercise certain of its business strategies. These restrictions may prevent DigitalGlobe and MDA from pursuing otherwise attractive business opportunities, making certain acquisitions or making changes to DigitalGlobe’s and MDA’s businesses prior to the completion of the merger or termination of the merger agreement, as applicable. In addition, these restrictions may prevent DigitalGlobe from making certain investments, selling assets, engaging in capital expenditures in excess of certain agreed limits and incurring indebtedness prior to the completion of the merger or termination of the merger agreement, as applicable. These restrictions could have an adverse effect on DigitalGlobe’s and MDA’s business, financial results, financial condition or stock price.

In addition, the merger agreement prohibits DigitalGlobe and MDA from (a) initiating, soliciting, knowingly facilitating or knowingly encouraging, subject to certain exceptions set forth in the merger agreement, any inquiry or the making of any proposal or offer that constitutes, or could reasonably be expected to lead to, an acquisition proposal, (b) engaging in, continuing or otherwise participating in any discussions with or negotiations relating to any acquisition proposal or any inquiry or indication of interest that could reasonably be expected to lead to an acquisition proposal or (c) furnishing or providing any non-public information regarding it or its subsidiaries or providing access to any of its properties, assets or employees, to any person in connection with or in response to any acquisition proposal or any proposal or offer that could reasonably be expected to lead to an acquisition proposal or inquiry or indication of interest that could reasonably be expected to lead to an

 

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acquisition proposal. DigitalGlobe may be required to pay MDA a termination fee of $85 million if the merger agreement is terminated under certain circumstances specified in the merger agreement, and MDA may be required to pay DigitalGlobe a termination fee of $85 million if the merger agreement is terminated under certain circumstances specified in the merger agreement.

These provisions may limit DigitalGlobe’s ability to pursue offers from third parties that could result in greater value to DigitalGlobe shareowners than the merger consideration. The termination fee may also discourage third parties from pursuing an alternative acquisition proposal with respect to DigitalGlobe.

If the merger agreement is terminated and DigitalGlobe determines to seek another business combination, DigitalGlobe may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the merger.

Possible U.S. federal income tax reform could adversely affect MDA.

The new U.S. administration and certain members of the U.S. House of Representatives have stated that one of their top legislative priorities is significant reform of the Code. Proposals by members of Congress have included, among other things, changes to U.S. federal tax rates, imposing significant additional limitations on the deductibility of interest, allowing for the expensing of capital expenditures, the migration from a “worldwide” system of taxation to a territorial system, and the use of certain border adjustments. There is a substantial uncertainty regarding both the timing and the details of any such tax reform. The impact of any potential tax reform on MDA’s business and on holders of MDA common shares is uncertain and could be adverse. Prospective investors should consult their own tax advisors regarding potential changes in U.S. tax laws.

The merger may result in MDA being treated as a U.S. corporation for U.S. federal income tax purposes.

Under current U.S. federal income tax law, a corporation organized under Canadian law is not treated as a U.S. corporation, and therefore is treated as a non-U.S. corporation. Section 7874 of the Code and the Treasury Regulations promulgated thereunder, however, contain rules that may cause a non-U.S. corporation that acquires the stock of a U.S. corporation to be treated as a U.S. corporation for U.S. federal income tax purposes under certain circumstances. If MDA were treated as a domestic corporation for U.S. federal income tax purposes, among other consequences, it would generally be subject to U.S. federal income tax on its worldwide income, and its dividends would be treated as dividends from a U.S. corporation. Regardless of the application of Section 7874 of the Code, MDA is expected to be treated as a Canadian tax resident for Canadian tax purposes. Consequently, if MDA were to be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code, it could be liable for both U.S. and Canadian taxes and dividends paid by MDA to its shareholders could be subject to both U.S. and Canadian withholding taxes. MDA and DigitalGlobe do not believe that MDA should be treated as a U.S. domestic corporation under Section 7874 of the Code. Further, the obligation to effect the merger is conditional upon MDA’s and DigitalGlobe’s receipt of an opinion from a nationally recognized tax advisor or legal counsel, dated as of the closing date and subject to certain qualifications and limitations set forth therein, to the effect that Section 7874 of the Code and the regulations promulgated thereunder should not apply in such a manner so as to cause MDA to be treated as a U.S. corporation for U.S. federal income tax purposes from and after the closing date.

There can be no assurance that the IRS, or a court will agree with the position that MDA is not treated as a U.S. domestic corporation under Section 7874 of the Code. The rules under the U.S. Treasury Regulations governing the application of Section 7874, including the ownership requirement, are new and complex, and there is limited guidance regarding the application of these rules. In addition, changes in facts or law might cause MDA to be treated as a domestic corporation for such purposes. New statutory or regulatory provisions, or other guidance under Section 7874 of the Code could be enacted or promulgated that would adversely affect MDA’s status for U.S. federal income tax purposes, all of which could have retroactive application. For more information, see the section entitled “The Merger Proposal—Certain U.S. Federal Income Tax Consequences of the Merger—Classification of MDA as a Foreign Corporation.

 

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If, as a result of the merger, MDA were treated as an inverted domestic corporation under the Homeland Security Act, the U.S. government may cease to make payments on its existing contracts with MDA and DigitalGlobe and may refrain from entering into new contracts with MDA in the future, which would substantially decrease the value of MDA’s business and, accordingly, the value of MDA common shares.

The Federal Acquisition Regulation (“FAR”) prohibits U.S. federal government agencies from using appropriated (or otherwise made available) funds for contracts with a foreign incorporated entity, or a subsidiary of such an entity, that is an “inverted domestic corporation,” as defined in the Homeland Security Act at 6 U.S.C. § 395(b). This means that government agencies may be prohibited from entering into new contracts with an inverted domestic corporation, and may be prohibited from paying for contractor activities on existing contracts after the date of the “inversion.” As the businesses of both MDA and DigitalGlobe are heavily dependent upon revenues generated from U.S. federal government contracts, the treatment of MDA as an inverted domestic corporation would substantially decrease the value of the combined company’s business following the merger and, accordingly, the value of MDA common shares. The application of the “inverted domestic corporation” definition is somewhat unclear due to the lack of detailed regulations or other guidance promulgated with respect to the relevant provisions of the Homeland Security Act. Section 7874 of the Code, discussed above, includes substantially similar provisions regarding the determination of whether a foreign incorporated corporation is treated as a U.S. domestic corporation for U.S. federal income tax purposes. While the regulatory provisions and other guidance issued by the U.S. Internal Revenue Service (“IRS”) and the Treasury Department with respect to Section 7874 provide more detailed guidance, which interprets Section 7874 as having expansive application, these regulations do not explicitly apply for the purposes of determining whether a corporation is an inverted domestic corporation under the Homeland Security Act, and it is unclear to what extent they should be viewed as interpretive guidance for such purposes. As discussed above, it is not expected that MDA will be treated as a U.S. domestic corporation under Section 7874 of the Code. Therefore, even if the expansive guidance issued by the IRS and Treasury Department were viewed as interpretive for purposes of the definition of “inverted domestic corporation” in the Homeland Security Act, it is not expected that MDA will be treated as an inverted domestic corporation for such purposes. There can be no assurance that the relevant U.S. federal government agencies, or a court or administrative tribunal, will agree with this position that MDA should not be treated as an inverted domestic corporation under the Homeland Security Act, and in addition, changes in facts or law might cause MDA to be treated as an inverted domestic corporation for such purposes. New statutory or regulatory provisions, or other guidance under the Homeland Security Act, or under the Code, could be enacted or promulgated that would adversely affect MDA’s status with regard to the FAR prohibition, all of which could have retroactive application.

Directors and executive officers of DigitalGlobe have interests in the merger that differ from the interests of DigitalGlobe shareowners generally, including, if the merger is completed, the receipt of financial and other benefits.

In considering the recommendation of the DigitalGlobe board of directors, you should be aware that DigitalGlobe’s directors and executive officers have interests in the merger that are different from, or in addition to, those of DigitalGlobe shareowners generally. These interests may include, among others, potential severance benefits, the treatment of outstanding equity awards pursuant to the merger agreement, rights to ongoing indemnification and insurance coverage, and certain rights to appointment to directorships in MDA and Holdings. These interests are described in more detail in the section entitled “The Merger Proposal—Interests of DigitalGlobe’s Directors and Executive Officers in the Merger.”

Except in specified circumstances, if the merger is not completed by 5:00 p.m. Eastern Time on December 7, 2017, either DigitalGlobe or MDA may choose not to proceed with the merger.

Either DigitalGlobe or MDA may terminate the merger agreement if the merger has not been completed by 5:00 p.m. Eastern Time on December 7, 2017. However, this right to terminate the merger agreement will not be available to DigitalGlobe or MDA if the failure of such party to fulfill any material obligation under the merger

 

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agreement has been the cause of or resulted in the failure of the merger to be completed on or before such time. For more information, see the section entitled “The Merger Agreement—Termination of the Merger Agreement.”

Holders of DigitalGlobe common stock and DigitalGlobe preferred stock will have a reduced ownership and voting interest after the merger and will exercise less influence over management of the combined organization.

Holders of DigitalGlobe common stock and DigitalGlobe preferred stock currently have the right to vote in the election of the DigitalGlobe board of directors and on other matters affecting DigitalGlobe. Upon the completion of the merger, each holder of DigitalGlobe common stock and DigitalGlobe preferred stock that receives MDA common shares will become a shareholder of MDA with a percentage ownership of the combined organization that is smaller than the shareowner’s percentage ownership of DigitalGlobe. It is expected that the former securityholders of DigitalGlobe as a group will receive shares in the merger constituting approximately 37.1% of the outstanding MDA common shares immediately after the merger (assuming the issuance of the 600,556 MDA common shares expected to be reserved for issuance in respect of Converted RSUs). As a result, holders of DigitalGlobe common stock and DigitalGlobe preferred stock as a group will have significantly less influence on the management and policies of MDA than they now have on the management and policies of DigitalGlobe.

MDA expects to maintain its status as a “foreign private issuer” in the United States until the earlier of January 1, 2020 or the incorporation of the ultimate parent of Holdings and DigitalGlobe in the United States and thus will be exempt from a number of rules under the U.S. Exchange Act.

As a “foreign private issuer,” MDA is exempt from rules under the U.S. Exchange Act that impose disclosure requirements, as well as procedural requirements, for proxy solicitations under Section 14 of the U.S. Exchange Act. MDA’s officers, directors and principal shareholders are also exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the U.S. Exchange Act. In addition, MDA is permitted, under a multi-jurisdictional disclosure system adopted by the United States and Canada, to prepare its disclosure documents filed under the U.S. Exchange Act in accordance with Canadian disclosure requirements, including preparing its financial statements in accordance with IFRS, which differ in some respects from U.S. GAAP. As a result, following the merger, holders of DigitalGlobe common stock may have less readily available access to information about the financial performance and business of MDA as compared to DigitalGlobe, or such information may be presented differently.

Once MDA loses its status as a foreign private issuer, it will be required to file annual, quarterly and current reports on Forms 10-K, 10-Q, and 8-K within the time periods required by the U.S. Exchange Act, which are significantly shorter than the time periods required of foreign private issuers for the less extensive periodic reporting required of them, and will have to mandatorily comply with U.S. federal proxy requirements. MDA would also become subject to Regulation FD of the U.S. Exchange Act, regulating the selective disclosure of non-public information, and MDA’s directors, senior management and affiliates would be subject to the disclosure and other requirements of Section 16 of the U.S. Exchange Act in respect of their ownership of and transactions in MDA securities. As a result, the regulatory and compliance costs to MDA under U.S. securities laws as a U.S. domestic issuer may be higher than those of a Canadian foreign private issuer eligible to use the multi-jurisdictional disclosure system.

MDA is organized under the laws of British Columbia and a portion of its assets are, and some of its directors and officers reside, outside of the United States. As a result, it may not be possible for shareowners to enforce civil liability provisions of the securities laws of the United States in Canada.

MDA is organized under the laws of British Columbia, Canada. A portion of MDA’s assets are located outside of the United States, and some of MDA’s directors and officers and some of the experts named in this proxy statement/prospectus are residents of jurisdictions outside of the United States. As a result, it may be

 

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difficult for investors to effect service within the United States upon MDA and those directors, officers and experts, or to realize in the United States upon judgments of courts of the United States predicated upon civil liability of MDA and such directors, officers or experts under the U.S. federal securities laws. There is uncertainty as to the enforceability in Canada by a court in original actions, or in actions to enforce judgments of U.S. courts, of the civil liabilities predicated upon the U.S. federal securities laws.

Resales of MDA common shares following the merger may cause the market value of MDA common shares to decline.

MDA expects that it will issue approximately 20,866,028 MDA common shares to DigitalGlobe securityholders at the effective time and reserve for issuance approximately 600,556 MDA common shares for issuance to holders of Converted RSUs following the effective time in connection with the merger. The issuance of these new shares and the sale of additional shares that may become eligible for sale in the public market from time to time could have the effect of depressing the market value for MDA common shares. The increase in the number of MDA common shares may lead to sales of such MDA common shares or the perception that such sales may occur, either of which may adversely affect the market for, and the market value of, MDA common shares.

The market value of MDA common shares may decline as a result of the merger.

The market value of MDA common shares may decline as a result of the merger if, among other things, MDA is unable to achieve the expected growth in earnings, or if the operational cost savings estimates in connection with the integration of DigitalGlobe’s and MDA’s businesses are not realized or if the transaction costs related to the merger are greater than expected. The market value also may decline if MDA does not achieve the perceived benefits of the merger as rapidly or to the extent anticipated by the market or if the effect of the merger on MDA’s financial position, results of operations or cash flows is not consistent with the expectations of financial or industry analysts.

DigitalGlobe and MDA may be targets of securities class action and derivative lawsuits which could result in substantial costs and may delay or prevent the merger from being completed.

Securities class action lawsuits and derivative lawsuits are often brought against companies that have entered into merger agreements. Even if the lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting consummation of the merger, then that injunction may delay or prevent the merger from being completed. Moreover, any litigation could be time consuming and expensive and could divert MDA’s and DigitalGlobe’s management’s attention away from their regular business. For information about lawsuits filed by alleged stockholders of DigitalGlobe relating to the merger, see the section entitled “The Merger Proposal—Litigation Relating to the Merger.”

One of the conditions to closing is that no governmental entity has issued a final and non-appealable statute, rule, order, decree or regulation or taken any other action that restrains, enjoins or otherwise prohibits the merger or makes the merger illegal. Consequently, if a settlement or other resolution is not reached in any lawsuit that is filed and a claimant secures injunctive or other relief prohibiting, delaying or otherwise adversely affecting MDA’s or DigitalGlobe’s ability to complete the merger on the terms contemplated by the merger agreement, then such law or injunctive or other relief may prevent the merger from becoming effective in a timely manner or at all.

The opinions of DigitalGlobe’s financial advisors do not reflect changes in circumstances that may occur between the original signing of the merger agreement and the completion of the merger.

Consistent with market practice, the DigitalGlobe board of directors has not obtained updated opinions from its financial advisors as of the date of this proxy statement/prospectus and does not expect to receive an updated,

 

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revised or reaffirmed opinion prior to the completion of the merger. Changes in the operations and prospects of DigitalGlobe and MDA, general market and economic conditions and other factors that may be beyond the control of DigitalGlobe, and on which DigitalGlobe’s financial advisors’ opinions were based, may significantly alter the value of DigitalGlobe or the price of shares of DigitalGlobe common stock by the time the merger is completed. The opinions do not speak as of the time the merger will be completed or as of any date other than the date of such opinions. Because DigitalGlobe’s financial advisors will not be updating their respective opinions, the opinions will not address the fairness of the merger consideration from a financial point of view at the time the merger is completed. The DigitalGlobe board of directors’ recommendation that DigitalGlobe shareowners vote “FOR” the merger proposal, however, is made as of the date of this proxy statement/prospectus. For a description of the opinion that the DigitalGlobe board of directors received from its financial advisors, see the section entitled “The Merger Proposal—Opinions of DigitalGlobe’s Financial Advisors.”

DigitalGlobe shareowners have appraisal rights under Delaware law.

Under the DGCL, DigitalGlobe shareowners who (1) do not vote in favor of the merger proposal, (2) deliver to DigitalGlobe a written demand for appraisal prior to taking of the vote on the merger proposal at the special meeting, (3) continuously hold their shares of DigitalGlobe common stock or DigitalGlobe preferred stock though the effective time and (4) otherwise comply with the requirements and procedures of Section 262 of the DGCL, are entitled to appraisal rights, which generally entitle shareowners to have their shares appraised by the Court of Chancery of the State of Delaware (the “Court of Chancery”) and to receive payment in cash of the “fair value” of their DigitalGlobe common stock or DigitalGlobe preferred stock, as applicable, exclusive of any elements of value arising from the accomplishment or expectation of the merger, together with interest on the amount determined to be fair value, if any, as determined by the Court of Chancery (or, in certain circumstances described in this proxy statement/prospectus, on the difference between the amount determined to be the fair value and the amount paid by DigitalGlobe to each DigitalGlobe shareowner entitled to appraisal prior to the entry of judgment in the appraisal proceeding). The appraised value would be determined by the Court of Chancery and could be less than, the same as or more than the merger consideration. Under Delaware law, shareowners are generally entitled to statutory interest on an appraisal award at a rate equal to 5% above the Federal Reserve discount rate compounded quarterly. DigitalGlobe shareowners who have properly demanded appraisal rights must file a petition for appraisal with the Court of Chancery within 120 days after the effective date of the merger. Should a material number of DigitalGlobe shareowners exercise appraisal rights and should the Court determine that the fair value of such shares of DigitalGlobe common stock or DigitalGlobe preferred stock is materially greater than the merger consideration, it could have a material adverse effect on the financial condition and results of operation of the surviving corporation. A summary description of the appraisal rights available to holders of DigitalGlobe common stock and DigitalGlobe preferred Stock under the DGCL and the procedures required to exercise statutory appraisal rights are included under the section entitled “The Merger Proposal—Appraisal or Dissenters Rights.” The full text of Section 262 of the DGCL is attached as Annex D to this proxy statement/prospectus. Due to the complexity of the procedures described above, DigitalGlobe shareowners who are considering exercising such rights are encouraged to seek the advice of legal counsel.

Risks Related to DigitalGlobe’s Business

You should read and consider the risk factors specific to DigitalGlobe’s business that will also affect the combined company after completion of the merger. These risks are described in DigitalGlobe’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which is incorporated by reference into this proxy statement/prospectus, and in other documents that are incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find Additional Information” for the location of information incorporated by reference into this proxy statement/prospectus.

 

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Risks Related to MDA’s Business

MDA’s future revenue and operating results is dependent on its ability to generate a sustainable order rate for its satellite manufacturing operations and develop new technologies to meet the needs of its customers or potential new customers.

MDA’s financial performance is dependent on its ability to generate a sustainable order rate for its satellite manufacturing operations. This can be challenging and may fluctuate on an annual basis as the number of satellite construction contracts awarded varies. The cyclical nature of the commercial satellite market could negatively impact MDA’s ability to accurately forecast customer demand. The markets that MDA serves may not grow in the future and MDA may not be able to maintain adequate gross margins or profits in these markets. MDA’s growth is dependent on the growth in the sales of services provided by its customers, its customers’ ability to anticipate market trends, and MDA’s ability to anticipate changes in the businesses of its customers and to successfully identify and enter new markets. If MDA fails to anticipate such changes in demand, its business, results of operations and financial position could be adversely affected.

The satellite manufacturing industry is characterized by development of technologies to meet changing customer demand for complex and reliable services. MDA’s systems embody complex technology and may not always be compatible with current and evolving technical standards and systems developed by others. Failure or delays by MDA to meet or comply with the requisite and evolving industry or user standards could have a material adverse effect on MDA’s business, results of operations and financial condition.

MDA needs to invest in technology to meet its customers’ changing needs. Technological development is expensive and requires long lead time. MDA may not be successful in developing new technology or that the technology it is successful in developing may not meet the needs of its customers or potential new customers.

The markets in which MDA operates are characterized by changing technology and evolving industry standards. Despite years of experience in meeting customer systems requirements with the latest in technological solutions, MDA may not be successful in identifying, developing and marketing products or systems that respond to rapid technological change, evolving technical standards and systems developed by others. MDA’s competitors may develop technology that better meets the needs of its customers. If MDA does not continue to develop, manufacture and market innovative technologies or applications that meet customers’ requirements, sales may suffer.

MDA’s business with various governmental entities is subject to the policies, priorities, regulations, mandates, and funding levels of such governmental entities and may be negatively or positively impacted by any change thereto.

Changes in government policies and priorities and the termination or suspension of government contracts could negatively impact MDA’s business, financial condition, results of operations and cash flows.

Changes in government policies, priorities, regulations or government agency mandates, or funding levels through agency budget reductions, the imposition of budgetary constraints or a decline in government support or deferment of funding for programs in which MDA or its customers participate could result in contract terminations, delays in contract awards, the failure to exercise contract options, the cancellation of planned procurements and fewer new business opportunities. In addition, contracts with any government, including the Canadian or U.S. government, may be terminated or suspended by the government at any time and could result in significant liability obligations of MDA. MDA seeks to have in place as standard provisions, termination for convenience language which reimburses MDA for reasonable costs incurred, subcontractor and employee termination and wind-down costs plus a reasonable amount of profit thereon. However, reparations for termination may fall short of the financial benefit associated with full completion and operation of a contract. Also, MDA may not be able to procure new contracts to offset the revenue or backlog lost as a result of any termination of government contracts. The loss of one or more large contracts could have a material adverse impact on MDA’s business, financial condition, results of operations and cash flows.

 

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MDA’s expansion into the U.S. government market is subject to significant regulatory risk.

Entry into the U.S. government market is subject to significant government regulation. The costs associated with execution of MDA’s U.S. government access plan are significant. A failure by MDA to maintain the relevant clearances and approvals could limit MDA’s ability to operate in the U.S. market. Further, there can be no assurance that MDA will be awarded contracts by the U.S. government. In addition, a failure by MDA to keep current and compliant with relevant U.S. regulations could result in fines, penalties, repayments, or suspension or debarment from U.S. government contracting or subcontracting for a period of time and could have an adverse effect on MDA’s standing and eligibility for future U.S. government contracts.

The failure of MDA and its subsidiaries to comply with the requirements of the National Industrial Security Program Operating Manual could result in interruption, delay or suspension of MDA’s ability to provide its products and services, and could result in loss of current and future business with the U.S. government.

MDA and/or its subsidiaries are parties to certain contracts with various departments and agencies of the U.S. government, including the Department of Defense, which require that certain of MDA’s subsidiaries (including Space Systems/Loral, LLC (“SSL”)) be issued facility security clearances under the National Industrial Security Program. The National Industrial Security Program requires that a corporation maintaining a facility security clearance be effectively insulated from foreign ownership, control or influence (“FOCI”). Because MDA is a Canadian entity, MDA has entered into, and is implementing, the Security Control Agreement, dated January 26, 2017, by and among MDA, Holdings and the U.S. Department of Defense (which we refer to as the “Security Control Agreement”), as a suitable FOCI mitigation arrangement under the National Industrial Security Program Operating Manual. A FOCI mitigation arrangement is necessary for certain of MDA’s U.S. subsidiaries, including SSL, to acquire and continue to maintain the requisite security clearances thereby enabling them to enter into contracts with U.S. government entities to perform classified work and to complete the performance under those contracts. Failure to maintain an appropriate agreement with DSS regarding the appropriate FOCI mitigation arrangement could result in invalidation or termination of the security clearances, which in turn would mean that MDA’s subsidiaries would not be able to enter into future contracts with the U.S. government requiring facility security clearances, and may result in the loss of the ability of those subsidiaries to complete existing contracts with the U.S. government.

MDA’s revenue, results of operations and reputation may be negatively impacted if its products contain defects or fail to operate in the expected manner.

MDA sells complex and technologically advanced systems, including satellites, products, hardware and software. Sophisticated software, including software developed by MDA, may contain defects that can unexpectedly interfere with the software’s intended operation. Defects may also occur in components and products that MDA manufactures or purchases from third parties. Most of the satellites and systems developed by MDA must function under demanding and unpredictable operating conditions and in harsh and potentially destructive environments. In addition, MDA may agree to the in-orbit delivery of a satellite, adding further risks to its ability to perform under a contract. Failure to achieve successful in-orbit delivery could result in significant penalties and other obligations to MDA.

MDA also employs sophisticated design and testing processes and practices, which include a range of stringent factory and on-site acceptance tests with criteria and requirements that are jointly developed with customers. MDA’s systems may not be successfully implemented, pass required acceptance criteria, or operate or give the desired output, or MDA may not be able to detect and fix all defects in the satellites, products, hardware and software it sells or resolve any delays or availability issues in the launch services it procures. Failure to do so could result in lost revenue and damage to MDA’s reputation, and may adversely affect MDA’s ability to win new contract awards.

 

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MDA operates in highly competitive industries and in various jurisdictions across the world which may cause MDA to have to reduce its prices.

MDA operates in highly competitive industries and many of MDA’s competitors are larger and have substantially greater resources than MDA. In addition, some of MDA’s foreign competitors currently benefit from, and others may benefit in the future from, protective measures by their home countries where governments are providing financial support, including significant investments in the development of new technologies. Government support of this nature greatly reduces the commercial risks associated with satellite development activities for these competitors. This market environment may result in increased pressures on MDA’s pricing and other competitive factors.

MDA conducts business internationally and is subject to fluctuations in foreign currencies. In particular, the strengthening of the U.S. dollar relative to the Euro and Asian currencies could make some of MDA’s non-U.S. competitors more cost competitive, placing increased pricing pressure on MDA during competitive bid processes primarily in the commercial communication satellite market.

MDA’s business is subject to various regulatory risks that could adversely affect MDA’s operations.

The environment in which MDA operates is highly regulated due to the sensitive nature of MDA’s complex and technologically advanced systems, including satellites, products, hardware and software, in addition to those regulations broadly applicable to publicly listed corporations. There are numerous regulatory risks that could adversely affect operations, including but not limited to:

 

    It is possible that the laws and regulations governing MDA’s business and operations will change in the future. A substantial portion of MDA’s revenue is generated from customers outside of Canada and the United States. There may be a material adverse effect on MDA’s financial condition and results of operations if MDA is required to alter its business to comply with changes in both domestic and foreign regulations, telecommunications standards, tariffs or taxes and other trade barriers that reduce or restrict MDA’s ability to sell its products and services on a global basis, or by political and economic instability in the countries in which it conducts business. Any failure to comply with such regulatory requirements could also subject MDA to various penalties or sanctions.

 

    Certain businesses of MDA and satellites, systems, products, services or technologies developed by MDA require the implementation or acquisition of products or technologies from third parties, including those in other jurisdictions. Also, certain of MDA’s satellites, systems, products or technologies may be required to be forwarded or exported to other jurisdictions. In certain cases and only where the technology is re-exported to certain countries, if the use of the technologies can be viewed by the jurisdiction in which that supplier or subcontractor resides as being subject to export constraints or restrictions relating to national security, MDA may not be able to obtain the technologies and products that it requires from subcontractors who would otherwise be its optimal choice or may not be able to obtain the export permits necessary to transfer or export its technology. To the extent that it is able, MDA obtains pre-authorization for re-export prior to signing contracts which oblige MDA to export subject technologies, including specific foreign government approval as needed. In the event of export restrictions, MDA may have the ability through contract force majeure provisions to be excused from its obligations. Notwithstanding these provisions, the inability to obtain export approvals, export restrictions or changes during contract execution or non-compliance by MDA’s customers could have an adverse effect on the revenues and margins of MDA.

 

    For certain aspects of its business operations, MDA is required to obtain U.S. government licenses and approvals and to enter into agreements with various government bodies in order to export satellites and related equipment, to disclose technical data or provide defense services to foreign persons. The delayed receipt of or the failure to obtain the necessary U.S. government licenses, approvals and agreements may prohibit entry into or interrupt the completion of a satellite construction contract by MDA which could lead to a customer’s termination of a contract for default, monetary penalties and/or the loss of incentive payments.

 

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    Some of MDA’s customers and potential customers, along with insurance underwriters and brokers, have asserted that U.S. export control laws and regulations governing disclosures to foreign persons excessively restrict their access to information about the satellite during construction and on-orbit. OFAC sanctions and requirements may also limit certain business opportunities or delay or restrict MDA’s ability to contract with potential foreign customers or operators. To the extent that MDA’s non-U.S. competitors are not subject to these export control or economic sanctions laws and regulations, they may enjoy a competitive advantage with foreign customers, and it could become increasingly difficult for the U.S. satellite manufacturing industry, including MDA, to recapture this lost market share. Customers concerned over the possibility that the U.S. government may deny the export license necessary for MDA to deliver their purchased satellite to them, or the restrictions or delays imposed by the U.S. government licensing requirements, even where an export license is granted, may elect to choose a satellite that is purportedly free of International Traffic in Arms Regulations (“ITAR”) offered by one of MDA’s European competitors. MDA is further disadvantaged by the fact that a purportedly “ITAR-free” satellite may be launched less expensively in China on the Chinese Long March rocket, a launch vehicle that, because of ITAR restrictions, is not available to MDA.

 

    There is a risk that MDA could become non-compliant with Canadian or U.S. securities laws and regulations or International Financial Reporting Standards. Non-compliance may result in significant penalties, in addition to loss of reputation.

 

    As part of the regulatory and legal environments in which it operates, MDA is subject to global anti-corruption laws that prohibit improper payments directly or indirectly to government officials, authorities or persons defined in those anti-corruption laws in order to obtain or retain business or other improper advantages in the conduct of business. MDA’s policies mandate compliance with anti-corruption laws. Failure by MDA’s employees, agents, subcontractors, suppliers and/or partners to comply with anti-corruption laws could impact MDA in various ways that include, but are not limited to, criminal, civil and administrative fines and/or legal sanctions and could have a significant adverse effect on MDA’s reputation, operations and financial results.

MDA is dependent on its ability to attract, train and retain employees. MDA’s inability to do so, or the loss of key personnel, would cause serious harm MDA’s business.

The success of MDA is largely dependent on the abilities and experience of its executive officers and other key personnel to oversee all aspects of its operations and to deliver on its corporate strategies, including managing acquisitions and execution of MDA’s U.S. access plan. Competition for highly skilled management, technical, research and development and other personnel is intense in MDA’s industry. In order to maintain its ability to compete as one of the prime contractors for technologically advanced communication satellites, MDA must continuously retain the services of a core group of specialists in a wide variety of disciplines for each phase of the design, development, manufacture and testing of its products. To the extent that the demand for qualified personnel exceeds supply, MDA could experience higher labor, recruiting or training costs in order to attract and retain such employees, or could experience difficulties in performing under contracts if MDA’s needs for such employees were unmet. MDA may not be able to retain its current executive officers or key personnel or attract and retain additional executive officers or key personnel as needed to deliver on its corporate strategy.

Security breaches or other significant disruptions of MDA’s IT networks and related systems could have a material adverse effect on MDA’s business and results of operations.

MDA faces the risk of a security breach or other significant disruption of its IT networks and related systems, whether through cyber-attack or cyber intrusion via the Internet, malware, computer viruses, and email attachments to persons with access to MDA’s systems, originating from a number of sources including hostile foreign governments. MDA also faces the added risk of a security breach or other serious disruption of the systems that it develops and installs for customers or that it develops and provides in any of its products. As a

 

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provider of communication satellites and complex systems, MDA faces a heightened risk of security breach or disruption from threats to gain unauthorized access to MDA’s and its customers’ proprietary or classified information stored on MDA’s networks and related systems and to certain of the equipment used in customers’ networks or related systems.

These types of information, IT networks and related systems are critical to the operation of MDA’s business and essential to its ability to perform day-to-day operations, and, in some cases, are critical to the operations of certain of MDA’s customers. Although MDA makes significant efforts to maintain the security and integrity of these types of information, IT networks and related systems, and MDA has implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that MDA’s security efforts and measures will be effective or that attempted security breaches or disruptions will not be successful or damaging. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because attempted security breaches, particularly cyber-attacks and intrusions, or disruptions will occur in the future, and because the techniques used in such attempts are constantly evolving and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected. Accordingly, MDA may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is virtually impossible for MDA to entirely mitigate this risk. A security breach or other significant disruption involving these types of information, IT networks and related systems could: (a) disrupt the proper functioning of these networks and systems and therefore MDA’s operations and/or those of certain of its customers; (b) result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information of MDA or its customers, including trade secrets, which others could use to compete against MDA or for disruptive, destructive or otherwise harmful purposes and outcomes; (c) compromise other sensitive government functions; and (d) damage MDA’s reputation with its customers (particularly agencies of various governments) and the public generally.

In addition, the cost of continually defending against cyber-attacks and breaches has increased in recent years and future costs and any or all of the foregoing could have a material adverse effect on MDA’s business and results of operations.

The failure to obtain data or alternate sources of data for its products from various sources may have an adverse impact on MDA’s results of operations and financial condition.

In MDA’s geospatial services operations, MDA relies on data collected from a number of sources including data obtained from satellites. MDA may become unable or limited in its ability to collect such data. For example, satellites can cease to function for reasons beyond MDA’s control. Additionally, in certain instances, governments may discontinue for periods of time the access to or operation of a satellite for any particular area on the Earth and for various reasons may not permit transmission of certain data, whether from a satellite owned by the government or not.

Although such data may be available from other sources at different prices, there is no assurance that the data will be available at the quality or at the times required. Also, the launch or operation of new satellites to replace old satellites may be delayed or may fail. Any of these factors could impact MDA’s ability to obtain data or alternate sources of data for its products and adversely affect MDA’s results of operations and financial condition. Sales for MDA Geospatial Services Inc., an indirect subsidiary of MDA, are dependent primarily on data received from the RADARSAT-2 satellite. The failure of RADARSAT-2 could have a material adverse effect on MDA’s results of operations and financial condition.

 

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MDA’s technology may violate the proprietary rights of third parties and MDA’s intellectual property may be misappropriated or infringed upon by third parties, each of which could have a negative impact on MDA’s operations.

If any of MDA’s technology violates proprietary rights, including copyrights and patents, third parties may assert infringement claims against MDA. Certain software modules and other intellectual property used by MDA or in MDA’s satellites, systems and products make use of or incorporate licensed software components and other licensed technology. These components are developed by third parties over whom MDA has no control. Any claims brought against MDA may result in limitations on MDA’s ability to use the intellectual property subject to these claims. MDA may be required to redesign its satellites, systems or products or to obtain licenses from third parties to continue offering MDA’s satellites, systems or products without substantially re-engineering such products or systems.

MDA’s intellectual property rights may be invalidated, circumvented, challenged, infringed or required to be licensed to others. An infringement or misappropriation could harm any competitive advantage MDA currently derives or may derive from its proprietary rights.

To protect MDA’s proprietary rights, MDA relies on a combination of patent protections, copyrights, trade secrets, trademark laws, confidentiality agreements with employees and third parties, and protective contractual provisions such as those contained in license agreements with consultants, subcontractors, vendors and customers. Although MDA applies rigorous standards, documents and processes to protect its intellectual property, there is no absolute assurance that the steps taken to protect MDA’s technology will prevent misappropriation or infringement. Litigation may be necessary to enforce or protect MDA’s intellectual property rights, protect its trade secrets or determine the validity and scope of the proprietary rights of others. Such litigation may be time-consuming and expensive to prosecute or defend and could result in the diversion of MDA’s time and resources. In addition, competitors may design around MDA’s technology or develop competing technologies.

Acquisitions could result in adverse impacts on MDA’s operations and in unanticipated liabilities and MDA may be unable to successfully integrate acquired companies.

MDA has in the past and may continue to expand its operations by acquiring additional businesses, products or technologies. There can be no assurance that MDA will be able to identify, acquire, obtain the required regulatory approvals, or profitably manage additional businesses or successfully integrate any acquired businesses, products or technologies into MDA without substantial expenses, delays or other operational, regulatory, or financial problems. In addition, any acquired businesses, products or technologies may not achieve anticipated revenues and income growth. Acquisitions could also result in potentially dilutive issuances of equity securities. Further, acquisitions may involve a number of additional risks, including diversion of management’s attention, failure to retain key personnel, or failure to attract the right talent to manage organizational growth. A failure by MDA to manage its acquisitions strategy successfully could have a material adverse effect on MDA’s business, results of operations and financial condition.

MDA’s ability to obtain additional debt or equity financing to finance operating working capital requirements and growth initiatives may be limited or difficult to obtain, which could adversely affect MDA’s operations and financial condition.

MDA needs capital to finance operating working capital requirements and growth initiatives and to pay its outstanding debt obligations as they become due for payment. If the cash generated from MDA’s businesses, together with the credit available under existing bank facilities, is not sufficient to fund future capital requirements, MDA will require additional debt or equity financing. MDA’s ability to access capital markets on terms that are acceptable will be dependent on prevailing market conditions, as well as MDA’s future financial condition. Further, MDA’s ability to increase its debt financing and/or renew existing facilities may be limited by its financial covenants, its credit objectives, and debt capital market conditions. Although MDA does not

 

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anticipate any difficulties in raising funds in the future, there can be no assurance that capital will be available on suitable terms and conditions, or that borrowing costs will not be adversely affected.

MDA’s current financing arrangements contain certain restrictive covenants that may impact MDA’s future operating and financial flexibility. MDA’s debt funding is provided under credit agreements with a number of banks and under the MDA Note Purchase Agreement with several private lenders. A failure by any lender to meet its funding obligations under MDA’s credit agreements could result in the need to replace the lender. While MDA does not anticipate any difficulty in finding a replacement lender in such circumstances, such a change may result in an amendment of pricing under the credit agreement to reflect prevailing market conditions. The credit agreements and the MDA Note Purchase Agreement contain a series of positive and negative covenants which MDA must comply with, including the achievement or maintenance of stated financial ratios. If MDA fails to comply with any covenants and is unable to obtain a waiver thereof, the lenders may be able to take certain actions with respect to the amounts owing under such agreements, including early payment thereof. Any such actions could have a material adverse effect on the financial condition of MDA.

MDA has provided, and may provide in the future, partial financing of working capital to or on behalf of its customers to enable it to remain competitive in certain satellite construction contracts. MDA has in the past implemented these investments in the form of orbital receivables, work-in-progress, performance guarantees, or bridge financing indemnification of third party lenders. MDA may also arrange for partial or full third party financing with export credit agencies to be provided to its customers, which may be partially guaranteed by MDA. If a customer defaults on an obligation to MDA or to an indemnified third party, this could have a significant impact on MDA’s business and results of operations. Financing provided by MDA and third party financing arranged by MDA may be linked to MDA’s ability to deliver the satellite in orbit. If MDA cannot achieve a successful in orbit delivery, MDA could be liable for repayment of amounts received from third party finance providers and could forfeit amounts financed by MDA and any future amounts that would have otherwise been earned. MDA undertakes significant customer due diligence prior to providing any financial support to customers and will attempt to limit its exposure through the use of insurance products and other contractual measures but there can be no assurance that such products will be available or will be at a cost that is economically viable.

MDA has in the past, and may continue in the future to, receive government grants for research and development activities and other business initiatives. Any agreement or grant of this nature with government may be accompanied by contractual obligations applicable to MDA which may result in the grant money becoming repayable if certain requirements are not met. A failure to meet contractual obligations under such agreements and grants and a consequent requirement to repay money received could negatively impact MDA’s results of operations and financial condition.

The failure to complete MDA’s firm fixed price contracts or the termination of such contracts may have an adverse impact on MDA’s financial condition.

A large percentage of MDA’s contracts are firm fixed price contracts, whereby MDA agrees to perform certain work for a fixed price and absorb any cost overruns. There is risk in every firm fixed price contract that MDA will be unable to deliver under the contract within the time specified and at a cost to MDA which is less than the contract price. Furthermore, a termination of a contract for default or schedule delays that are caused by actions or inactions by MDA could result in significant financial penalties to MDA. These firm fixed price contracts may involve the completion of satellite development and manufacturing, large-scale system engineering, software, hardware and product development projects. Estimates of contract costs are based on a number of assumptions, such as future economic conditions, productivity of MDA’s employees, performance of MDA’s subcontractors and suppliers, price and availability of labor and materials, and other requirements that may affect contract costs and schedule. Although considered reasonable by MDA, these assumptions are inherently uncertain. MDA also has processes and systems in place to reasonably measure and monitor the technical and financial performance of contracts and, together with the customer, continuously monitors these projects to identify early warnings related to these risks.

 

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MDA’s business may be adversely affected by deterioration in the credit quality of, or defaults under its contracts with, third parties with whom MDA does business.

MDA has certain commercial customers that are either highly leveraged or are in the development stages and may not be fully funded. There is a risk that these customers will be unable to meet their payment obligations, or are significantly delayed in meeting their payment obligations, under the satellite construction contracts. In the event that any of MDA’s customers encounter financial difficulties, MDA’s cash flows and liquidity may be materially and adversely affected. MDA may not be able to mitigate these effects because it manufactures satellites to each customer’s specifications and generally purchases materials in response to a particular customer contract. Moreover, many of the satellite construction contracts include orbital receivables, and certain satellite construction contracts may require MDA to provide vendor financing to or on behalf of its customers, including guarantees or a combination of these contractual terms. To the extent that MDA’s contracts contain orbital receivables provisions or MDA provides vendor financing to or on behalf of its customers, MDA’s financial exposure is further increased.

There is a risk that MDA will not be able to access export credit financing to facilitate the sale of MDA’s communication satellites and other products to non-Canadian and non-United States customers.

Fluctuations in foreign exchange rates could have a negative impact on MDA’s business.

MDA’s revenues, expenses, assets and liabilities denominated in currencies other than the Canadian dollar are translated into Canadian dollars for the purposes of compiling its consolidated financial statements. MDA uses hedging strategies to manage and minimize the impact of exchange rate fluctuations on its cash flow and economic profits. There are complexities inherent in determining whether and when foreign exchange exposures will materialize, in particular given the possibility of unpredictable revenue variations arising from schedule delays and contract postponements. Furthermore, MDA could be exposed to the risk of non-performance of its hedging counterparties. MDA may also have difficulty in fully implementing its hedging strategy depending on the willingness of hedging counterparties to extend credit. Accordingly, no assurances may be given that MDA’s exchange rate hedging strategy will protect it from significant changes or fluctuations in revenues and expenses denominated in non-Canadian dollars.

MDA’s business is vulnerable to natural disasters and other disruptions that may adversely affect its business, financial conditions or results of operations.

MDA is vulnerable to natural disasters, in particular seismic activity. MDA’s satellite manufacturing operations are located in California in proximity to the San Andreas fault line, one of the longest and most heavily populated earthquake-prone rifts in the world. MDA’s operations could also be subject to other natural disasters or significant disruptions including tsunamis, floods, earthquakes, fires, water shortages, other extreme weather conditions, medical epidemics, acts of terrorism, power shortages and blackouts, and telecommunications failures. In the event of such a natural disaster or other disruption, MDA could experience: disruptions to its operations or the operations of suppliers, subcontractors, distributors or customers; destruction of facilities; and / or loss of life.

While MDA has attempted to limit its exposure through the use of insurance products and other contingency measures, there can be no assurance that, after such an event, MDA would be able to recover its business to the same operating level as prior to the event.

MDA’s operations are subject to governmental law and regulations relating to environmental matters, which may expose MDA to significant costs and liabilities that could negatively impact its financial condition.

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transportation of hazardous substances, and the ownership and operation of real property. While MDA does not operate environmentally sensitive manufacturing processes at its company-owned facilities in Montreal, Quebec and Palo Alto, California, there can be no assurance that the previous owners of these properties had strictly complied with such environmental laws and regulations. Such laws and regulations may result in significant liabilities and costs to MDA due to the actions or inactions of the previous owners.

Risks Relating to Investing in and Ownership of MDA’s Common Shares

MDA’s common shares have no trading history in the United States.

The MDA common shares currently trade on the TSX. It is a condition to the completion of the merger that the MDA common shares issued pursuant to the merger agreement be authorized for listing on the NYSE or the NASDAQ, in addition to the TSX. Currently, there is no public market in the United States for the MDA common shares. The price at which the MDA common shares will trade on the NYSE, NASDAQ and TSX may be lower than the value for which they are exchanged at the closing of the merger. In addition, because the liquidity and trading patterns of securities listed on the TSX may be substantially different from those of securities traded on the NYSE or NASDAQ, historical trading prices may not be indicative of the prices at which the MDA common shares will trade in the future on the NYSE or NASDAQ.

MDA’s common shares will be traded on more than one market and this may result in price variations.

Trading in the MDA common shares on the NYSE or NASDAQ and TSX will take place in different currencies (U.S. dollars on the NYSE or NASDAQ and Canadian dollars on the TSX), and at different times (resulting from different trading days and different public holidays in the United States and Canada). The trading prices of the MDA common shares on these two markets may at times differ due to these and other factors. Any decrease in the price of MDA’s common shares on the TSX could cause a decrease in the trading price of the MDA common shares on the NYSE or NASDAQ and vice versa. There can be no assurance that the expected benefits of listing the MDA common shares on the NYSE or NASDAQ will be realized or, if realized, that such benefits will be sustained.

The market price of MDA common shares following the consummation of the merger could be volatile and DigitalGlobe shareowners could lose all or part of their investment.

Notwithstanding the fact that MDA will issue a significant number of MDA common shares to DigitalGlobe shareowners in connection with the merger, there is no guarantee that a significant market for the MDA common shares will develop or be sustained on the NYSE or NASDAQ following the merger. DigitalGlobe shareowners may decide to sell the common shares received by them in the merger, which will generally be eligible for immediate resale, rather than remain MDA shareholders, which could have an adverse impact on the trading price of the common shares. As MDA is a company organized under the laws of British Columbia and is not as well-known to investors in the United States as it is in Canada, investors in Canada may be more likely to purchase any MDA common shares sold by DigitalGlobe shareowners following the merger. If a substantial portion of the common shares issued to DigitalGlobe shareowners are sold to investors in Canada following the merger, the trading price of the MDA common may decrease as a result of such sales. In addition, a perception among investors that such sales will occur could depress the market price of the MDA common shares prior to the issuance of common shares in connection with the merger. In the past, following periods of large price declines in the public market price of a company’s securities, securities class action litigation has often been initiated against that company. Litigation of this type against MDA could result in substantial costs and diversion of management’s attention and resources, which would adversely affect its business. Any adverse determination in litigation against MDA could also subject it to significant liabilities.

 

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As a foreign private issuer, MDA is permitted to follow certain home country corporate governance practices instead of otherwise applicable SEC and NYSE or NASDAQ requirements, which may result in less protection than is accorded to investors under rules applicable to U.S. domestic issuers.

As a foreign private issuer, in reliance on NYSE or NASDAQ rules that permit a foreign private issuer to follow the corporate governance practices of its home country, MDA will be permitted to follow certain Canadian corporate governance practices instead of those otherwise required under the corporate governance standards for U.S. domestic issuers. Following the listing of the MDA common shares on the NYSE or NASDAQ, MDA expects to follow Canadian home country practices with regard to obtaining shareholder approval for certain dilutive events. MDA may in the future elect to follow Canadian home country practices with regard to other matters such as the formation and composition of its board of directors, its audit, human resources and management compensation and governance and nominating committees and separate sessions of independent directors. Accordingly, MDA’s shareholders may not be afforded the same protection as provided under NYSE or NASDAQ corporate governance rules. Following Canadian home country governance practices, as opposed to the requirements that would otherwise apply to a U.S. company listed on the NYSE or NASDAQ, may provide less protection than is accorded to investors in U.S. domestic issuers.

As a foreign private issuer, MDA will not be subject to the provisions of Regulation FD or U.S. proxy rules and will be exempt from filing certain U.S. Exchange Act reports, which could result in MDA common shares being less attractive to investors.

As a foreign private issuer, MDA will be exempt from a number of requirements under U.S. securities laws that apply to public companies that are not foreign private issuers. In particular, MDA will be exempt from the rules and regulations under the U.S. Exchange Act related to the furnishing and content of proxy statements, and MDA’s officers, directors and principal shareholders will be exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the U.S. Exchange Act. In addition, MDA will not be required under the U.S. Exchange Act to file annual and current reports and financial statements with the SEC as frequently or as promptly as U.S. domestic companies whose securities are registered under the U.S. Exchange Act and MDA will generally be exempt from filing quarterly reports with the SEC under the U.S. Exchange Act. MDA will also be exempt from the provisions of Regulation FD, which prohibits the selective disclosure of material nonpublic information to, among others, broker-dealers and holders of a company’s securities under circumstances in which it is reasonably foreseeable that the holder will trade in the company’s securities on the basis of the information. Even though MDA intends to comply voluntarily with Regulation FD and will comply with applicable Canadian securities laws and regulations, these exemptions and leniencies may reduce the frequency and scope of information and protections to which you are entitled as an investor.

MDA would lose its foreign private issuer status if a majority of its shares are held by U.S. persons and a majority of its directors or executive officers are U.S. citizens or residents or MDA fails to meet additional requirements necessary to avoid loss of foreign private issuer status. Although MDA has elected to comply with certain U.S. regulatory provisions, loss of foreign private issuer status would make compliance with such provisions mandatory. The regulatory and compliance costs to MDA under U.S. securities laws as a U.S. domestic issuer may be significantly higher than the costs MDA incurs as a Canadian foreign private issuer eligible to use the Multi-Jurisdictional Disclosure System, or “MJDS”. If MDA ceases to be a foreign private issuer, it would not be eligible to use the MJDS or other foreign issuer forms and will be required to file periodic and current reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. MDA may also be required to modify certain of its policies to comply with the governance obligations of U.S. domestic issuers. Such modifications will involve additional costs. In addition, MDA would lose its ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers.

 

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THE SPECIAL MEETING

DigitalGlobe is providing this proxy statement/prospectus to DigitalGlobe shareowners for the solicitation of proxies to be voted at the special meeting that DigitalGlobe has called for the purposes described below. This proxy statement/prospectus is first being mailed to DigitalGlobe shareowners on or about June 22, 2017 and provides DigitalGlobe shareowners with the information they need to know about the merger and the proposals to be able to vote or instruct their vote to be cast at the special meeting.

Date, Time and Place of the Special Meeting

The special meeting will be held at 9:00 am, Mountain Time, on July 27, 2017, at DigitalGlobe’s corporate headquarters located at 1300 West 120th Avenue, Westminster, Colorado 80234, or at any adjournment or postponement thereof.

Purpose of the Special Meeting

At the special meeting, DigitalGlobe shareowners will be asked to consider and vote on the following proposals, which we collectively refer to as the “proposals”:

 

    Merger Proposal: to approve and adopt the merger agreement, pursuant to which, among other things, Merger Sub will merge with and into DigitalGlobe, with DigitalGlobe surviving the merger as an indirect wholly owned subsidiary of MDA;

 

    Advisory Compensation Proposal: to approve, on an advisory (non-binding) basis, certain specified compensation that will or may be paid by DigitalGlobe to its named executive officers that is based on or otherwise relates to the merger; and

 

    Adjournment Proposal: to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve and adopt the merger proposal.

Each of the proposals is described in more detail in the sections entitled “The Merger Proposal”, “The Advisory Compensation Proposal” and “The Adjournment Proposal”, respectively. DigitalGlobe does not expect a vote to be taken on any matters, other than the proposals, at the special meeting or any adjournment or postponement thereof. However, DigitalGlobe shareowners may also be asked to transact such other business as may properly be brought before the special meeting or any adjournment or postponement thereof.

Recommendation of the DigitalGlobe Board of Directors

The DigitalGlobe board of directors has (a) determined and declared that the merger agreement is advisable and fair to, and in the best interests of, DigitalGlobe and its shareowners, (b) determined that the merger agreement and the transactions contemplated thereby, including the merger, taken together, are at a price and on terms that are in the best interests of DigitalGlobe and its shareowners, (c) unanimously approved and declared advisable the merger agreement and the transactions contemplated thereby, including the merger, and (d) resolved, subject to the terms of the merger agreement, to recommend adoption of the merger agreement by the DigitalGlobe shareowners. The DigitalGlobe board of directors unanimously recommends that DigitalGlobe shareowners vote “FOR” the merger proposal, “FOR” the advisory compensation proposal and “FOR” the adjournment proposal.

For more information, see the section entitled “The Merger Proposal—DigitalGlobe’s Reasons for the Merger; Recommendation of the DigitalGlobe Board of Directors.”

In considering the recommendation of the DigitalGlobe board of directors with respect to the proposals, you should be aware that DigitalGlobe’s directors and executive officers have interests that are different from, or in addition to, the interests of DigitalGlobe shareowners generally. For more information, see the section entitled “The Merger Proposal—Interests of DigitalGlobes Directors and Executive Officers in the Merger.”

 

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Record Date and Outstanding Shares of DigitalGlobe Common Stock and DigitalGlobe Preferred Stock

Only DigitalGlobe shareowners of record as of the close of business on June 16, 2017 (the “record date”) will be entitled to receive notice of, and to vote at, the special meeting or at any adjournment or postponement thereof.

A complete list of DigitalGlobe shareowners entitled to vote at the special meeting will be available for inspection at DigitalGlobe’s principal place of business during regular business hours for a period of no less than 10 days before the special meeting and, during the special meeting, in each case, at the DigitalGlobe corporate headquarters, 1300 West 120th Avenue, Westminster, Colorado 80234.

Common Stock

Each share of DigitalGlobe common stock outstanding as of the record date is entitled to one vote on each proposal presented for consideration at the special meeting. As of the close of business on the record date, there were 62,219,652 shares of DigitalGlobe common stock issued and outstanding and entitled to vote at the special meeting.

Preferred Stock

Each share of DigitalGlobe preferred stock outstanding as of the record date is entitled to that whole number of votes equal to the number of shares of DigitalGlobe common stock into which such DigitalGlobe preferred stock would be convertible into on the record date, voting together as a single class with the holders of common stock on an as-converted to DigitalGlobe common stock basis. As of the close of business on the record date, there were 80,000 shares of DigitalGlobe preferred stock issued and outstanding and entitled to vote at the special meeting, which outstanding shares of DigitalGlobe preferred stock were convertible into 3,056,935 shares of DigitalGlobe common stock as of the record date.

Quorum

The holders of a majority of the shares of DigitalGlobe common stock and DigitalGlobe preferred stock outstanding and entitled to vote on the record date must be present in person or represented by proxy to constitute a quorum at the special meeting, with DigitalGlobe preferred stock represented on an as-converted to DigitalGlobe common stock basis. If you attend the special meeting in person or you authorize a proxy to vote your shares by submitting a properly executed proxy card by mail or following the instructions contained therein with respect to submitting such authorization by telephone or the Internet, you will be considered part of the quorum. Because there were 65,276,587 shares of common stock, including shares of outstanding DigitalGlobe preferred stock calculated on an as-converted to DigitalGlobe common stock basis, entitled to vote as of the record date, we will need holders of at least 32,638,294 shares present in person or by proxy at the special meeting for a quorum to exist.

Abstentions will be deemed present and entitled to vote at the special meeting for the purpose of determining the presence of a quorum. DigitalGlobe common stock and DigitalGlobe preferred stock held by a shareowner that does not attend the special meeting or fails to submit a valid proxy to vote their shares at the special meeting and DigitalGlobe common stock and DigitalGlobe preferred stock held in “street name” with respect to which the beneficial owner fails to give voting instructions to the bank, broker or other nominee with respect to their shares, will not be considered present and entitled to vote at the special meeting for the purpose of determining the presence of a quorum.

If a quorum is not present or, subject to approval of the adjournment proposal by DigitalGlobe shareowners, if there are not sufficient votes for the approval of the merger proposal, DigitalGlobe expects that the special meeting will be adjourned to solicit additional proxies. At any subsequent reconvening of the special meeting, all

 

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proxies will be voted in the same manner as the manner in which such proxies could have been voted at the original convening of the special meeting, except for any proxies that have been validly revoked or withdrawn prior to the reconvened meeting.

Required Vote

Required Vote to Approve the Merger Proposal

Approval of the merger proposal requires the affirmative vote of the holders of a majority in voting power of the outstanding shares of DigitalGlobe common stock and DigitalGlobe preferred stock (on an as-converted to DigitalGlobe common stock basis), voting together as a single class, as of the record date. Therefore, if you do not submit a valid proxy or attend the special meeting to vote your shares of DigitalGlobe common stock and/or DigitalGlobe preferred stock, or if you abstain from voting or fail to instruct your broker, bank or other nominee how to vote your shares on the merger proposal, it will have the same effect as a vote “AGAINST” the merger proposal.

Required Vote to Approve the Advisory Compensation Proposal

Approval, on an advisory (non-binding) basis, of the advisory compensation proposal requires the affirmative vote of holders of a majority of the shares of DigitalGlobe common stock and DigitalGlobe preferred stock (on an as-converted to DigitalGlobe common stock basis), voting together as a single class that are present at the special meeting in person or by proxy and entitled to vote on the advisory compensation proposal. Therefore, if your shares of DigitalGlobe common stock or DigitalGlobe preferred stock are present at the special meeting but are not voted on the proposal, or if you abstain from voting on the advisory compensation proposal, each will have the same effect as a vote “AGAINST” the advisory compensation proposal. If you fail to submit a proxy or fail to attend the special meeting, or if you do not submit any instruction to your broker, bank or nominee, your shares of DigitalGlobe common stock or DigitalGlobe preferred stock will not be voted and will not be counted in determining the outcome of the advisory compensation proposal, assuming that a quorum is otherwise present. The vote on the advisory compensation proposal will not be binding on MDA, DigitalGlobe, their respective board of directors or any of their respective committees.

Required Vote to Approve the Adjournment Proposal

Approval of the adjournment proposal requires the affirmative vote of holders of a majority of the shares of DigitalGlobe common stock and DigitalGlobe preferred stock (on an as-converted to DigitalGlobe common stock basis), voting together as a single class that are present at the special meeting in person or by proxy and entitled to vote on the adjournment proposal. Therefore, if your shares of DigitalGlobe common stock or DigitalGlobe preferred stock are present at the special meeting but are not voted on the proposal, or if you abstain from voting on the adjournment proposal, each will have the same effect as a vote “AGAINST” the adjournment proposal. If you fail to submit a proxy or fail to attend the special meeting, or if you do not submit any instruction to your broker, bank or nominee, your shares of DigitalGlobe common stock or DigitalGlobe preferred stock will not be voted and will not be counted in determining the outcome of the adjournment proposal, assuming that a quorum is otherwise present.

Adjournment

In accordance with the DigitalGlobe bylaws, the special meeting may be adjourned by the DigitalGlobe shareowners entitled to vote at the special meeting present in person or by proxy thereat. If a quorum is not present or if there are not sufficient votes for the approval of the merger proposal, DigitalGlobe expects that the special meeting will be adjourned to solicit additional proxies. At any subsequent reconvening of the special meeting, all proxies will be voted in the same manner as the manner in which such proxies would have been voted at the original convening of the special meeting, except for any proxies that have been validly revoked or withdrawn prior to the reconvened meeting.

 

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Voting by Directors and Executive Officers

As of the record date for the special meeting, the DigitalGlobe directors and executive officers had the right to vote approximately 774,326 shares of DigitalGlobe common stock, representing approximately 1.2% of the shares of DigitalGlobe capital stock then outstanding and entitled to vote at the special meeting (with DigitalGlobe preferred stock calculated on an as-converted to DigitalGlobe common stock basis). As of the record date, no DigitalGlobe director or executive officer owns any shares of DigitalGlobe preferred stock. It is expected that the DigitalGlobe directors and executive officers who are DigitalGlobe shareowners will vote “FOR” the merger proposal, “FOR” the advisory compensation proposal and “FOR” the adjournment proposal, although none of them has entered into any agreement requiring them to do so. As of the record date, the directors and executive officers of MDA owned, in the aggregate, approximately 1,000 shares of DigitalGlobe common stock, representing less than 0.01% of the shares of DigitalGlobe common stock and DigitalGlobe preferred stock then outstanding and entitled to vote at the special meeting. As of the record date, no MDA director or executive officer owns any shares of DigitalGlobe preferred stock.

Voting by Proxy or in Person

Voting and Submitting a Proxy for DigitalGlobe Common Stock or Preferred Stock Held by Holders of Record

If you were a holder of record of DigitalGlobe common stock or DigitalGlobe preferred stock at the close of business on the record date, you may vote your shares or, to ensure that your shares are represented at the special meeting, you may authorize a proxy to vote your shares by:

 

    Internet, by going to the website shown on your proxy card and following the instructions outlined on the secured website using certain information provided on your proxy card, thereby authorizing a proxy to vote your shares.

 

    Telephone, by using the toll-free number shown on your proxy card, or by following the instructions on your proxy card, thereby authorizing a proxy to vote your shares.

 

    By Mail, if you received your proxy materials by mail; you may submit your written proxy by completing the proxy card enclosed with those materials and signing, dating and returning your proxy card by mail in the postage-paid envelope provided, which requires no additional postage if mailed in the United States, thereby authorizing a proxy to vote your shares.

 

    In Person, by attending the special meeting and voting.

When you submit a proxy by telephone or the Internet, your proxy is recorded immediately. We encourage you to submit your proxy using these methods whenever possible. If you submit a proxy by telephone or the Internet, please do not return your proxy card by mail.

All shares of DigitalGlobe capital stock represented by each properly executed and valid proxy will be voted in accordance with the instructions given on the proxy. If a DigitalGlobe shareowner executes a proxy card without giving instructions, the DigitalGlobe capital stock represented by that proxy card will be voted “FOR” (a) the merger proposal, (b) the advisory compensation proposal and (c) the adjournment proposal.

Your vote is very important, regardless of the number of shares you own. Accordingly, please submit your proxy by telephone, the Internet or mail, whether or not you plan to attend the special meeting in person. Proxies submitted by telephone or the Internet must be received by 11:59 p.m. on July 26, 2017. A properly executed proxy card to vote your shares at the special meeting must be received prior to voting at the special meeting.

Voting and Submitting a Proxy for DigitalGlobe Common Stock and Preferred Stock Held in “Street Name”

If you hold your shares of DigitalGlobe common stock or DigitalGlobe preferred stock in “street name,” which means your shares are held of record by a bank, broker or other nominee, you must provide instructions to your bank, broker or nominee to direct how your shares are voted at the special meeting. Please follow the

 

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instructions provided by your bank, broker or other nominee regarding the voting of your shares of DigitalGlobe common stock and/or DigitalGlobe preferred stock. Unless your bank, broker or other nominee has discretionary authority to vote your shares, your bank, broker or other nominee may not vote your shares without voting instructions from you. In accordance with the rules of the NYSE, brokers who hold DigitalGlobe common stock or DigitalGlobe preferred stock in street name for their customers have authority to vote on “routine” proposals when they have not received instructions from beneficial owners, but are precluded from exercising their voting discretion with respect to non-routine matters. All of the proposals at the special meeting (i.e., the merger proposal, the advisory compensation proposal and the adjournment proposal) are expected to be considered non-routine proposals. As a result, absent voting instructions from the beneficial owner of such shares, brokers will not be empowered to vote such shares at the special meeting and we do not expect broker non-votes on any of the proposals at the special meeting. A broker non-vote occurs on an item when (i) a broker has discretionary authority to vote on at least one routine proposal at a meeting, but under stock exchange rules is not permitted to vote on other non-routine proposals without instructions from the beneficial owner of the shares and (ii) that broker exercises its discretionary authority on the routine proposal after the beneficial owner fails to provide such instructions, resulting in broker non-votes on each of the non-routine proposals.

If you fail to instruct your bank, broker or other nominee how to vote your shares, that failure will have the same effect as a vote “AGAINST” the merger proposal, but will have no effect on the advisory compensation proposal or the adjournment proposal, assuming a quorum is present.

If you hold shares through a broker, bank or other nominee and wish to vote your shares in person at the special meeting, you must obtain a legal proxy from your broker, bank or nominee and present it to the inspector of election with your ballot when you vote at the special meeting.

Revocability of Proxies and Changes to a DigitalGlobe Shareowner’s Vote

If you are a shareowner of record, you may revoke your proxy or change your vote by:

 

    sending a written notice (bearing a date later than the date of the proxy) stating that you revoke your proxy to our Corporate Secretary, Daniel L. Jablonsky, in writing at 1300 West 120th Avenue, Westminster, Colorado 80234;

 

    signing and returning a valid, later-dated proxy card by mail;

 

    submitting a new proxy electronically via the Internet or by telephone; or

 

    attending and voting in person at the special meeting (please note that your attendance at the special meeting will not, without voting, revoke any proxy that you have previously given).

If you choose to submit a later-dated proxy by telephone or the Internet to change your vote, you must do so by 11:59 p.m. on July 26, 2017. If you choose to submit a later-dated proxy card by mail to change your vote, your proxy card must be received before voting at the special meeting.

If your shares are held in “street name” by a broker, bank or other nominee, and you have directed such broker, bank or other nominee to vote your shares, you may change your vote by submitting new voting instructions to your broker, bank or nominee, or, if you have obtained a legal proxy from your broker, bank or nominee giving you the right to vote your shares, by attending the special meeting and voting in person.

Abstentions and Broker Non-Votes

An abstention occurs when a shareowner attends a meeting, either in person or by proxy, but abstains from voting. At the special meeting, abstentions will be counted in determining whether a quorum is present. Abstentions and a failure to vote your shares of DigitalGlobe capital stock (including the failure of a record owner to execute and return a proxy card and the failure of a beneficial owner of shares held in “street name” by a broker or other holder of record to give voting instructions to the broker or other holder of record) will have the

 

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same effect as a vote “AGAINST” the merger proposal. Additionally, abstentions and a failure to vote your DigitalGlobe capital stock, to the extent it is present at the special meeting in person or by proxy, will have the same effect as a vote “AGAINST” the advisory compensation proposal and the adjournment proposal. For shares of DigitalGlobe capital stock held in “street name,” only shares of capital stock affirmatively voted “FOR” the merger proposal will be counted as a vote in favor of such proposal.

If no instruction as to how to vote is given (including an instruction to abstain) in an executed, duly returned and not revoked proxy, the proxy will be voted “FOR” (a) the merger proposal, (b) the advisory compensation proposal and (c) the adjournment proposal. However, if you indicate that you wish to vote against the merger proposal, your shares will only be voted in favor of the advisory compensation proposal and the adjournment proposal if you indicate that you wish to vote in favor of such proposal(s).

If you hold your DigitalGlobe capital stock in a brokerage account and you do not provide voting instructions to your broker, your shares will not be voted on any proposal because under the current rules of the NYSE, brokers do not have discretionary authority to vote on any of the proposals. A broker non-vote occurs on an item when (i) a broker has discretionary authority to vote on at least one routine proposal at a meeting, but under stock exchange rules is not permitted to vote on other non-routine proposals without instructions from the beneficial owner of the shares and (ii) that broker exercises its discretionary authority on the routine proposal after the beneficial owner fails to provide such instructions, resulting in broker non-votes on each of the non-routine proposals. Since there are no items on the agenda that your broker has discretionary authority to vote upon, we do not expect there will be any broker non-votes at the special meeting.

Tabulation of Votes

In advance of the special meeting, the DigitalGlobe board of directors, by resolution, or the chairman of the board or president of DigitalGlobe will appoint an inspector of election for the special meeting who will count the votes. The inspector of election will, among other matters, determine the number of shares of DigitalGlobe common stock and DigitalGlobe preferred stock (on an as-converted to DigitalGlobe common stock basis) represented at the special meeting to confirm the existence of a quorum, determine the validity of all proxies and ballots and certify the results of voting on all proposals submitted to the DigitalGlobe shareowners.

Solicitation of Proxies; Expenses of Solicitation

DigitalGlobe will bear all costs and expenses in connection with the solicitation of proxies from its shareowners. In addition to the solicitation of proxies by mail, DigitalGlobe will request that banks, brokers and other record holders send proxies and proxy material to the beneficial owners of DigitalGlobe capital stock and secure their voting instructions, if necessary. DigitalGlobe will reimburse the banks, brokers and other record holders for their reasonable expenses in taking those actions. DigitalGlobe has also made arrangements with Innisfree M&A Incorporated to assist in soliciting proxies and in communicating with DigitalGlobe shareowners and estimates that it will pay them a fee of approximately $25,000 plus reasonable out-of-pocket fees and expenses for these services. Proxies may also be solicited by DigitalGlobe’s directors, officers and other employees through the mail or by telephone, the Internet, fax or other means, but no additional compensation will be paid to these persons.

Householding

The SEC has adopted a rule concerning the delivery of annual reports and proxy statements. It permits DigitalGlobe to send a single notice of meeting and, to the extent requested, a single set of this proxy statement/prospectus to any household at which multiple shareowners reside if DigitalGlobe believes they are members of the same family, until such time as DigitalGlobe receives contrary instructions. This rule is called “householding,” and its purpose is to help reduce printing and mailing costs of proxy materials. See the section entitled “Householding of Proxy Materials” for additional information.

 

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A number of brokerage firms have instituted householding. If you and members of your household have multiple accounts holding DigitalGlobe capital stock, you may have received a householding notification from your broker. Please contact your broker directly if you have questions, require additional copies of this proxy statement/prospectus or wish to revoke your decision to household. These options are available to you at any time.

If you hold shares beneficially in street name, please contact your broker, bank or nominee directly if you have questions, or require additional copies of the notice of meeting or proxy statement/prospectus.

Other Information

As of the date of this proxy statement/prospectus, the DigitalGlobe board of directors knows of no other matters that will be presented for consideration at the special meeting other than as described in this proxy statement/prospectus. If any other matters properly come before the special meeting, or any adjournments of the special meeting, the enclosed proxies will give the individuals that DigitalGlobe shareowners name as proxies discretionary authority to vote the shares represented by these proxies as to any of these matters.

The matters to be considered at the special meeting are of great importance to DigitalGlobe shareowners. Accordingly, you are urged to read and carefully consider the information contained in or incorporated by reference into this proxy statement/prospectus and submit your proxy by telephone or the Internet or complete, date, sign and promptly return the enclosed proxy in the enclosed postage-paid envelope. If you submit your proxy by telephone or the Internet, you do not need to return the enclosed proxy card.

DigitalGlobe shareowners should not send stock certificates with their proxies. If approved, a letter of transmittal and instructions for the surrender of DigitalGlobe stock certificates will be mailed to DigitalGlobe shareowners shortly after the completion of the merger.

DigitalGlobe intends to announce the preliminary voting results at the special meeting. In addition, within four business days following certification of the final voting results, DigitalGlobe intends to file the final voting results with the SEC on a Current Report on Form 8-K.

Assistance

If you need assistance in completing your proxy card, have questions regarding the special meeting, or would like additional copies, without charge, of this proxy statement/prospectus, please contact:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

1-888-750-5834 (toll-free from the U.S. and Canada)

1-412-232-3651 (from other locations)

 

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THE MERGER PROPOSAL

This section of the proxy statement/prospectus describes the various aspects of the merger and related matters. This section may not contain all of the information that is important to you. You should carefully read this entire proxy statement/prospectus and the documents incorporated by reference into this proxy statement/prospectus, including the full text of the merger agreement, a copy of which is attached to this proxy statement/prospectus as Annex A, for a more complete understanding of the merger. In addition, important business and financial information about each of DigitalGlobe and MDA is included in or incorporated by reference into this proxy statement/prospectus. For a listing of the documents incorporated by reference into this proxy statement/prospectus, see the section entitled “Where You Can Find Additional Information.”

As discussed throughout this proxy statement/prospectus, DigitalGlobe is asking the DigitalGlobe shareowners to approve and adopt the merger agreement.

As described in further detail in this section entitled “The Merger Proposal,” and the sections entitled “Questions and Answers About the Merger and the Special Meeting,” “Summary,” and “The Merger Agreement,” the DigitalGlobe board of directors has adopted a resolution (a) determining and declaring that the merger agreement is advisable and fair to, and in the best interests of, DigitalGlobe and its shareowners, (b) determining that the merger agreement and the transactions contemplated thereby, including the merger, taken together, are at a price and on terms that are in the best interests of DigitalGlobe and its shareowners, (c) approving and declaring advisable the merger agreement and the transactions contemplated thereby, including the merger, and (d) resolving, subject to the terms of the merger agreement, to recommend adoption of the merger agreement by the DigitalGlobe shareowners. The merger is subject to the satisfaction of the conditions set forth in the merger agreement, including, among others, the approval and adoption of the merger agreement by the DigitalGlobe shareowners holding a majority of the outstanding DigitalGlobe common stock and DigitalGlobe preferred stock (on an as-converted to DigitalGlobe common stock basis), voting together as a single class as of the record date at the special meeting. Accordingly, the approval of the merger proposal by the DigitalGlobe shareowners is a condition to the obligations of MDA and DigitalGlobe to complete the merger.

The DigitalGlobe board of directors recommends a vote “FOR” the merger proposal.

Transaction Structure

The merger agreement provides that, subject to the terms and conditions of the merger agreement, at the effective time, Merger Sub, an indirect wholly owned subsidiary of MDA, will merge with and into DigitalGlobe. As a result, DigitalGlobe will survive the merger as an indirect wholly owned subsidiary of MDA. The terms and conditions of the merger are contained in the merger agreement, which is described in this proxy statement/prospectus and attached to this proxy statement/prospectus as Annex A. You are encouraged to read the merger agreement carefully, as it is the legal document that governs the merger. All descriptions in this summary and elsewhere in this proxy statement/prospectus of the terms and conditions of the merger are qualified by reference to the merger agreement.

Merger Consideration

Under the terms of the merger agreement, if the merger is completed, each share of DigitalGlobe common stock outstanding immediately prior to the effective time (other than shares of DigitalGlobe common stock held directly or indirectly by MDA, DigitalGlobe or any of their respective subsidiaries and except for shares of DigitalGlobe common stock owned by holders who properly exercise their appraisal rights under the DGCL) will automatically be cancelled and converted into the right to receive (a) cash in an amount equal to US $17.50 and (b) 0.3132 of a validly issued, fully paid and non-assessable MDA common share, without interest and subject to any required withholding for taxes.

Each share of DigitalGlobe preferred stock issued and outstanding immediately prior to the effective time (other than shares of DigitalGlobe preferred stock held directly or indirectly by MDA, DigitalGlobe or any of

 

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their respective subsidiaries and except for shares of DigitalGlobe preferred stock owned by holders who properly exercise their appraisal rights under the DGCL) will be converted into the right to receive the merger consideration that the holder of such DigitalGlobe preferred stock would have been entitled to receive had such holder, immediately prior to the effective time, converted such DigitalGlobe preferred stock into DigitalGlobe common stock in accordance with the DigitalGlobe certificate of designation.

Based on the number of shares of DigitalGlobe common stock, shares of DigitalGlobe preferred stock, DigitalGlobe options and DigitalGlobe RSUs outstanding as of June 12, 2017, pursuant to the merger agreement, MDA would issue approximately 20,866,028 MDA common shares at the effective time to DigitalGlobe securityholders and would reserve for issuance approximately 600,556 MDA common shares, which will be issuable upon the vesting of the Converted RSUs following the effective time. The actual number of MDA common shares to be issued, and reserved for issuance, pursuant to the merger agreement will be determined immediately prior to the effective time based on the number of shares of DigitalGlobe common stock, shares of DigitalGlobe preferred stock, DigitalGlobe options and DigitalGlobe RSUs outstanding at such time. Based on the number of shares of DigitalGlobe common stock, shares of DigitalGlobe preferred stock, DigitalGlobe options and DigitalGlobe RSUs outstanding as of June 12, 2017, and the number of MDA common shares outstanding as of June 12, 2017, immediately after completion of the merger former securityholders of DigitalGlobe would own approximately 37.1% of the then outstanding MDA common shares (assuming the issuance of the 600,556 MDA common shares expected to be reserved for issuance in respect of Converted RSUs).

Based on the closing price of MDA common shares on the TSX on February 16, 2017, the last full trading day prior to media reports that DigitalGlobe and MDA were in merger discussions, the per share value of DigitalGlobe common stock implied by the merger consideration was $35.00 (converted to U.S. dollars using a Canadian dollar-to-U.S. dollar exchange rate of 0.7612). Based on the closing price of shares of DigitalGlobe common stock on the NYSE on June 16, 2017, the most recent practicable date prior to the date of this proxy statement/prospectus, the per share value of DigitalGlobe common stock implied by the merger consideration was $32.36 (converted to U.S. dollars based on the Bank of Canada’s daily average Canadian dollar-to-U.S. dollar exchange rate on the applicable date). The implied value of the merger consideration will fluctuate, however, as the market price of MDA common shares fluctuates, because the stock consideration that is payable per share of DigitalGlobe common stock is a fixed fraction of an MDA common share. As a result, the value of the stock consideration that DigitalGlobe shareowners will receive upon the completion of the merger could be greater than, less than or the same as the value of the stock consideration on the date of this proxy statement/prospectus or at the time of the special meeting. Accordingly, you are encouraged to obtain current stock price quotations for DigitalGlobe common stock and MDA common shares before deciding how to vote with respect to the merger proposal. DigitalGlobe common stock trades on the NYSE under the ticker symbol “DGI” and MDA common shares trade on the TSX under the ticker symbol “MDA.” The price of DigitalGlobe common stock on the NYSE is reported in U.S. dollars, while the price of MDA common shares on the TSX is reported in Canadian dollars.

Background of the Merger

As part of DigitalGlobe’s ongoing consideration and evaluation of its long-term strategic goals and plans, DigitalGlobe management and the DigitalGlobe board of directors periodically review, consider and assess DigitalGlobe’s operations and financial performance, as well as overall industry conditions and their impact on DigitalGlobe’s strategic goals and plans. This review includes, among other items, potential opportunities for business combinations, acquisitions and other financial and strategic alternatives.

The merger and the terms of the merger agreement are the result of arm’s length negotiations conducted between representatives of MDA, DigitalGlobe and their respective legal and financial advisors. The following is a summary of the principal events, meetings, negotiations and actions among the parties leading up to the execution and public announcement of the merger agreement.

In September and October of 2015, representatives of Barclays, at the request of the DigitalGlobe board of directors and in response to inquiries from financial sponsors, contacted four financial sponsors to gauge their

 

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interest in a potential acquisition of DigitalGlobe. During this time, a fifth financial sponsor independently contacted DigitalGlobe to engage in a preliminary discussion regarding a potential acquisition of DigitalGlobe. On October 22, 2015, the DigitalGlobe board of directors determined to terminate all such discussions after considering, among other matters, the then current trading price of DigitalGlobe common stock and DigitalGlobe’s standalone business plan. Following the termination of these discussions, the DigitalGlobe board of directors and management continued to execute DigitalGlobe’s standalone business plan.

On October 13, 2016, Howard L. Lance, MDA’s President and Chief Executive Officer, contacted Jeffrey R. Tarr, DigitalGlobe’s President and Chief Executive Officer, by telephone to gauge DigitalGlobe’s interest in meeting to discuss a potential combination of MDA and DigitalGlobe. Mr. Tarr promptly communicated MDA’s indication of interest to members of the DigitalGlobe board of directors individually.

Shortly thereafter, DigitalGlobe contacted PJT Partners as a potential financial advisor to DigitalGlobe, and invited PJT Partners to present to the DigitalGlobe board of directors at its October 20, 2016 meeting.

On October 20, 2016, the DigitalGlobe board of directors held a regularly scheduled meeting. Representatives of O’Melveny, DigitalGlobe’s outside legal counsel, and PJT Partners were also present at the meeting. The DigitalGlobe board of directors discussed the October 13, 2016 conversation between Messrs. Lance and Tarr, as well as a range of other potential strategic alternatives, including whether any other strategic parties may have an interest in a business combination with DigitalGlobe and the likelihood that a financial sponsor would be able to make a competitive bid for DigitalGlobe. Representatives of PJT Partners provided the DigitalGlobe board of directors with information on MDA, discussed other potential acquirers of DigitalGlobe, and advised that, in their judgment, based in part on DigitalGlobe’s prior experience, most financial sponsors would find it challenging to make a premium bid for DigitalGlobe. Extensive discussion by the DigitalGlobe board of directors then ensued. Following this discussion, the DigitalGlobe board of directors authorized management to engage in preliminary discussions with MDA regarding a potential business combination. The DigitalGlobe board of directors also approved the engagement of PJT Partners as a financial advisor to DigitalGlobe, subject to negotiation by management of an acceptable engagement letter with PJT Partners.

On October 20, 2016, Mr. Tarr advised Mr. Lance that the DigitalGlobe board of directors had authorized Mr. Tarr to engage in preliminary discussions with MDA regarding a potential combination of MDA and DigitalGlobe. Messrs. Lance and Tarr agreed to meet in person on October 26, 2016.

On October 26, 2016, Messrs. Lance and Tarr met in person to discuss the strategic rationale for a business combination between MDA and DigitalGlobe, though MDA made no proposal regarding a potential business combination with DigitalGlobe at this time. During the meeting, Mr. Tarr requested that MDA provide DigitalGlobe with additional information regarding the potential business combination, including proposed terms for a business combination, regulatory approvals required by a business combination, potential customer reactions, synergies and the proposed timing. Mr. Lance agreed to provide the requested information within a month. Mr. Tarr promptly updated members of the DigitalGlobe board of directors individually regarding this meeting.

On October 29, 2016, Mr. Tarr called Mr. Lance to reiterate his request from their October 26, 2016 meeting that the proposal address the proposed terms for a business combination, the regulatory approvals required by a business combination, the potential customer reactions, synergies and the proposed timing. Mr. Lance advised Mr. Tarr that he would work with his advisors to put together a proposal in the coming weeks.

On November 20, 2016, Mr. Lance met with Mr. Tarr and once again conveyed the strategic rationale for MDA to combine with DigitalGlobe, including the two companies’ complementary business profiles and diversification prospects, the meaningful opportunity for synergies and the value creation that would result from the potential combination. Mr. Lance provided Mr. Tarr with a presentation on MDA, which included a non-binding indication of interest to merge with DigitalGlobe in an all-stock transaction at no premium to the

 

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trading price of DigitalGlobe common stock at the time of the announcement of the transaction. Mr. Lance provided Mr. Tarr with MDA’s preliminary assessment of regulatory considerations and also expressed a potential willingness to explore alternative consideration formulations, including a mix of cash and stock at up to a ten percent premium to the trading price of DigitalGlobe common stock. Mr. Tarr indicated DigitalGlobe’s need for deal certainty, including a regulatory termination fee in favor of DigitalGlobe and a public commitment by MDA to domicile the ultimate parent of DigitalGlobe in the United States within a reasonable time in the future. Mr. Tarr promptly communicated MDA’s indication of interest to members of the DigitalGlobe board of directors individually.

On November 25, 2016, Mr. Lance contacted Mr. Tarr and reiterated a willingness to consider a cash and stock transaction structure that would include a control premium (but did not specify an amount). Following the conversation between Messrs. Lance and Tarr, representatives of Merrill Lynch, Pierce, Fenner & Smith Incorporated, which we refer to as “BofA Merrill Lynch”, financial advisor to MDA, called representatives of PJT Partners to follow up on this conversation. Mr. Tarr promptly communicated his conversation with Mr. Lance to members of the DigitalGlobe board of directors individually.

On November 27, 2016, DigitalGlobe held a special meeting of its board of directors. Also present were representatives of O’Melveny and PJT Partners. Mr. Tarr led the DigitalGlobe board in a discussion of recent developments and discussions between DigitalGlobe and MDA. Representatives of PJT Partners provided their views on MDA’s November 20, 2016 all-stock proposal, as well as MDA’s financial capacity to include cash in the proposed transaction so as to offer a control premium while maintaining MDA as the acquiring entity. Representatives of PJT Partners also summarized recent discussions with representatives of BofA Merrill Lynch regarding potential synergies and constraints on the amount of cash consideration and premium MDA could offer. The DigitalGlobe board of directors discussed potential regulatory considerations that could arise in a transaction with MDA and the importance of a public commitment by MDA to domicile the ultimate parent of DigitalGlobe in the United States within a reasonable time in the future. The DigitalGlobe board of directors and representatives of PJT Partners discussed and considered other potential business combination partners for DigitalGlobe, including both strategic parties and financial sponsor parties and the representatives of PJT Partners stated that, in their judgment, based in part on DigitalGlobe’s prior experience, a financial sponsor likely could not be competitive with the potential strategic bidders. Also at this meeting, representatives of O’Melveny reviewed with the DigitalGlobe board of directors its fiduciary duties with respect to the MDA proposal. After extensive additional discussion among the directors, the DigitalGlobe board of directors directed Mr. Tarr to respond to Mr. Lance that MDA’s November 20, 2016 proposal was not acceptable to DigitalGlobe and to encourage MDA to improve its proposal to include a control premium, to provide that a meaningful portion of the consideration be paid in cash and to also consider making a public commitment at the time of any proposed transaction announcement with respect to its plan to domicile the ultimate parent of DigitalGlobe in the United States within a reasonable time in the future.

On November 29, 2016, Mr. Tarr informed Mr. Lance that the DigitalGlobe board of directors was receptive to combining the two companies, but not on the terms of MDA’s November 20, 2016 indication of interest. Mr. Tarr advised that the DigitalGlobe board of directors would require a control premium and a meaningful portion of the consideration to be paid in cash. Messrs. Lance and Tarr agreed to discuss the matter further later that week and Mr. Lance indicated that MDA would work to convey a revised proposal to Mr. Tarr by December 2, 2016.

On November 29, 2016, representatives of PJT Partners reiterated the message that Mr. Tarr conveyed to Mr. Lance on November 29, 2016, to representatives of BofA Merrill Lynch, including the need for any revised MDA proposal to include a meaningful cash component and premium to the trading price of DigitalGlobe common stock, and also conveyed that DigitalGlobe would need a public commitment from MDA regarding its plan to domicile the ultimate parent of DigitalGlobe in the United States within a reasonable time in the future.

On December 2, 2016, Messrs. Lance and Tarr met in person and Mr. Lance orally delivered MDA’s proposal to acquire DigitalGlobe at a 15% premium to the trading price of DigitalGlobe common stock at the

 

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time of announcement of the transaction (based on a measurement period to be determined by the parties), to be paid in MDA common shares and cash. Pursuant to this proposal, the surviving entity of the transaction would be a Canadian holding company, dual-listed on securities exchanges in the United States and Canada. Mr. Tarr informed Mr. Lance that the DigitalGlobe board of directors would meet to consider the proposal. At the meeting, Messrs. Lance and Tarr also briefly discussed the various regulatory approvals that would be required before any transaction could be consummated. Additionally, Mr. Lance reserved MDA’s right to revise its proposal after conducting further due diligence on DigitalGlobe.

On December 6, 2016, DigitalGlobe held a special meeting of the board of directors, with representatives of PJT Partners and O’Melveny present, at which time Mr. Tarr and representatives of PJT Partners led the DigitalGlobe board of directors in discussions regarding the revised December 2, 2016 indication of interest from MDA. Representatives of PJT Partners compared MDA’s revised indication of interest to MDA’s original November 20, 2016 proposal, presented certain financial projections prepared by DigitalGlobe management and reviewed alternative valuation methodologies for assessing the value of DigitalGlobe. Also at this meeting, representatives of PJT Partners presented to the DigitalGlobe board of directors a list of potential strategic parties that may be interested in a business combination transaction with DigitalGlobe. After extensive discussion, the DigitalGlobe board of directors and representatives of PJT Partners identified the four potential strategic parties (Parties A, B, C and D, in each case defined below), which they collectively believed to be most likely to be interested in, and able to consummate, a business combination with DigitalGlobe, for potential inclusion in outreach efforts to assess whether a superior proposal was reasonably available to DigitalGlobe. Also discussed at this meeting was a potential strategic investor (“Party E”), which representatives of PJT Partners considered to be more likely interested in a strategic investment in DigitalGlobe rather than a business combination transaction or acquisition. Extensive discussion then ensued among the directors. At the conclusion of this meeting, the DigitalGlobe board of directors unanimously determined to continue discussions with MDA, to reach out at the appropriate time to one or more of Parties A, B, C and D (with the first of such parties, a strategic party (“Party A”), to be contacted by Mr. Tarr following this meeting), and to form a transactions committee of the DigitalGlobe board of directors consisting of Mr. Eddy Zervigon, who served as Chairman of the Transactions Committee, Mr. Nick Cyprus and Mr. Larry Hough (the “Transactions Committee”) to assist the DigitalGlobe board of directors in its review of the strategic alternatives available to DigitalGlobe.

On December 6, 2016, Mr. Tarr called Mr. Lance to advise him that the DigitalGlobe board of directors had considered the MDA proposal and had authorized DigitalGlobe management to negotiate and enter into a mutual confidentiality agreement and engage in a mutual due diligence review process with MDA. Representatives of PJT Partners, on behalf of DigitalGlobe, delivered a draft mutual nondisclosure agreement to representatives of BofA Merrill Lynch (which nondisclosure agreement included a customary standstill provision that would automatically terminate upon DigitalGlobe’s entry into a merger agreement with a third party). Messrs. Lance and Tarr agreed to hold management meetings on December 20 and 21, 2016.

On December 8, 2016, Mr. Tarr contacted a representative of a Party A to invite Party A to consider whether it would be interested in exploring a potential business combination with DigitalGlobe. The representative of Party A informed Mr. Tarr that he would discuss the matter internally and follow-up with Mr. Tarr.

On December 8, 2016, on behalf of MDA, representatives of BofA Merrill Lynch delivered a revised mutual nondisclosure agreement to representatives of PJT Partners, which included a mutual exclusivity undertaking by MDA and DigitalGlobe. Subsequently on December 8, 2016, after discussion with DigitalGlobe and representatives of O’Melveny, representatives of PJT Partners delivered a further revised mutual nondisclosure agreement to MDA, which, among other things, removed the mutual exclusivity undertaking. Representatives of PJT Partners subsequently confirmed to representatives of BofA Merrill Lynch DigitalGlobe’s position that it would not agree to a mutual exclusivity undertaking. In a subsequent discussion between the parties, Mr. Lance requested that Mr. Tarr commit that DigitalGlobe would not contact other potential interested parties while it was engaged in discussions with MDA. Mr. Tarr responded that he could not make that commitment.

 

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On December 9, 2016, BofA Merrill Lynch and PJT Partners discussed arranging a due diligence session for the parties and their respective outside legal counsel, to be held the following week.

On December 12, 2016, the DigitalGlobe Transactions Committee held a meeting with representatives of PJT Partners and O’Melveny present. At this meeting, Mr. Tarr led the Transactions Committee in a discussion of recent developments with MDA, including negotiations of the MDA nondisclosure agreement and the proposed exclusivity undertaking, as well as Mr. Tarr’s December 8, 2016 discussion with a representative of Party A. The Transactions Committee discussed these matters and then directed Mr. Tarr and PJT Partners to reiterate to MDA that DigitalGlobe was not prepared to agree to an exclusivity undertaking with MDA. At this meeting, the Transactions Committee also discussed the possibility of soliciting other strategic parties in addition to Party A. Following the meeting, Mr. Tarr and Mr. Lance spoke by telephone regarding the benefits of a strategic combination of DigitalGlobe and MDA, and also discussed logistics for mutual diligence meetings.

From December 12 through December 14, 2016, representatives of O’Melveny and Vinson & Elkins, MDA’s outside counsel, further negotiated the terms of the mutual nondisclosure agreement, which agreement was entered into by DigitalGlobe and MDA on December 14, 2016. The nondisclosure agreement did not contain an exclusivity undertaking by either party.

On December 14, 2016, representatives of senior management of each of DigitalGlobe and MDA had a call to discuss certain preliminary due diligence matters, including required regulatory approvals for the proposed transaction and MDA’s pending Security Control Agreement with the U.S. Department of Defense.

On December 15, 2016, Mr. Tarr had a call with a representative of Party A, where such representative indicated that Party A was not likely to pursue a potential business combination with DigitalGlobe, but that Party A would continue to consider the opportunity.

On December 17, 2016, General Howell M. Estes III, Chairman of the DigitalGlobe board of directors, contacted a representative of another strategic party (“Party B”) to discuss a potential business combination with DigitalGlobe. Also on December 17, 2016, representatives of PJT Partners contacted certain other representatives of Party B regarding the potential for a business combination between the parties.

On December 20 and 21, 2016, representatives of senior management of each of MDA and DigitalGlobe met to provide each other with an overview of their respective businesses and operations. Representatives of each of BofA Merrill Lynch and PJT Partners also participated in this meeting.

On December 21, 2016, Party B separately informed General Estes and representatives of PJT Partners that Party B was not interested in a potential business combination with DigitalGlobe. Party B stated that it did not believe it could offer the DigitalGlobe shareowners a premium over the then current trading price per share of DigitalGlobe common stock and also expressed concern regarding Party B’s ability to successfully integrate and manage DigitalGlobe’s commercial business operations.

On December 22, 2016, a representative of PJT Partners contacted a representative of another strategic party (“Party C”) regarding a potential business combination with DigitalGlobe. Representatives of Party C indicated that Party C would review DigitalGlobe’s publicly available information and respond promptly if it was interested in seeking additional information.

On December 22, 2016, a representative of PJT Partners contacted a representative of another strategic party (“Party D”) to assess its interest in a potential business combination with DigitalGlobe. The representative from Party D indicated that Party D would review DigitalGlobe’s publicly available materials and respond to PJT Partners in early January 2017.

On December 22, 2016, the DigitalGlobe Transactions Committee held a meeting, with representatives of PJT Partners and O’Melveny present, at which meeting Mr. Tarr and representatives of PJT Partners updated the

 

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Transactions Committee on conversations with Parties A, B, C and D, as well as the recent communications with MDA. Mr. Tarr informed the Transactions Committee that MDA expected to obtain approval to either affirm or revise MDA’s December 2, 2016 oral indication of interest at a meeting of the MDA board of directors to be held during the week of January 23, 2017.

On December 22, 2016, DigitalGlobe closed a refinancing transaction in which it terminated its existing credit agreement and entered into a $1.275 billion senior secured term loan facility and a $200 million senior secured revolving credit facility. The refinancing transaction, including the subsequent tender for, and redemption of, DigitalGlobe’s outstanding 5.25% Senior Notes, reduced the interest rate and extended the maturities on DigitalGlobe’s indebtedness.

During the weeks of January 2nd, 9th, and 16th, 2017, members of the management teams and financial advisors of each of DigitalGlobe and MDA held several calls to discuss the potential synergies arising from a combination of DigitalGlobe and MDA, as well as MDA’s commitment to domicile the ultimate parent of DigitalGlobe in the United States within a reasonable time in the future.

On January 4, 2017, representatives of DigitalGlobe and Party C negotiated a nondisclosure agreement (which nondisclosure agreement included a customary standstill provision that automatically terminated upon DigitalGlobe’s entry into the merger agreement), which the parties subsequently entered into on January 7, 2017.

On January 9, 2017, members of the management team of DigitalGlobe and representatives of PJT Partners met with representatives of Party C. At this meeting, the DigitalGlobe management team made a presentation to Party C regarding the DigitalGlobe business. Representatives of PJT Partners requested that if Party C was interested in pursuing a business combination with DigitalGlobe, Party C should provide DigitalGlobe with a written, non-binding indication of interest by January 20, 2017.

On January 9, 2017, a representative of PJT Partners had a call with a representative of Party A, during which conversation the Party A representative advised PJT Partners that Party A would further discuss the potential business combination opportunity internally and follow up with PJT Partners.

On January 9 and 10, 2017, DigitalGlobe and Party D negotiated the terms of a nondisclosure agreement (which nondisclosure agreement included a customary standstill provision that automatically terminated upon DigitalGlobe’s entry into the merger agreement), which the parties subsequently entered into on January 10, 2017.

On January 10, 2017, DigitalGlobe and Party C held a follow-up meeting regarding the potential business combination of Party C and DigitalGlobe.

On January 11, 2017, the management team of MDA met with the management team of DigitalGlobe to conduct financial and human resources diligence on DigitalGlobe. Representatives of each of BofA Merrill Lynch and PJT Partners also participated in these meetings.

On January 12, 2017, members of the management team of DigitalGlobe along with representatives of PJT Partners, met with representatives of Party D. During this meeting, the DigitalGlobe management team made a presentation to Party D regarding the DigitalGlobe business. Representatives of PJT Partners requested that if Party D was interested in pursuing a business combination with DigitalGlobe that Party D provide DigitalGlobe with a written, non-binding indication of interest by January 20, 2017.

On January 12, 2017, the electronic data room for DigitalGlobe was opened to representatives of MDA and its respective advisors.

On January 13, 2017, the DigitalGlobe Transactions Committee held a meeting, with representatives of O’Melveny and PJT Partners present, at which meeting Mr. Tarr and representatives of PJT Partners updated the Transactions Committee on discussions and meetings with MDA, Party A, Party B, Party C and Party D.

 

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On January 16, 2017, members of the management team of DigitalGlobe, along with representatives of PJT Partners, spoke with representatives of Party D by telephone for a follow-up financial diligence meeting.

On January 17, 2017, a representative of Party A contacted PJT Partners to set up a meeting between the management teams of Party A and DigitalGlobe regarding interest in a potential acquisition of DigitalGlobe.

On January 17, 2017, a representative of Party C informed DigitalGlobe that Party C was not interested in pursuing further discussions with DigitalGlobe regarding a strategic business combination as it did not believe that it could offer the DigitalGlobe shareowners a premium over the then current trading price per share of DigitalGlobe common stock, nor was a business combination in line with its strategic priorities.

On January 19, 2017, a representative of Party D informed DigitalGlobe that Party D was not interested in pursuing further discussions with DigitalGlobe regarding a strategic business combination because, in part, Party D was concerned about its ability to successfully integrate and manage DigitalGlobe’s commercial business operations and because Party D could not offer the DigitalGlobe shareowners a premium over the then current trading price per share of DigitalGlobe common stock.

On January 22, 2017, Messrs. Lance and Tarr spoke by phone and Mr. Lance delivered a revised, non-binding oral indication of interest to acquire DigitalGlobe at a 15% premium to the trading price of DigitalGlobe common stock at the time of announcement of the transaction (based on a measurement period to be determined by the parties), to be paid in MDA common shares and a cash component based on 4.0x net leverage for the pro forma combined entity (calculated as estimated pro forma debt minus estimated pro forma cash, divided by estimated pro forma last twelve months (LTM) earnings before interest, tax, depreciation and amortization (EBITDA)) at the then-estimated time of closing of the transaction. As with MDA’s December 2, 2016 proposal, the surviving entity of the transaction would be a Canadian holding company dual-listed on securities exchanges in the United States and Canada. Mr. Tarr promptly communicated this January 22, 2017 revised MDA proposal to members of the DigitalGlobe board of directors individually and provided an update on recent discussions with each of Party A, Party C and Party D.

On January 24, 2017, members of MDA’s management team, along with MDA’s outside tax advisors, participated in a call with members of DigitalGlobe’s management team and representatives of each of PJT Partners and O’Melveny for preliminary discussions regarding tax considerations relating to MDA’s commitment to domicile the ultimate parent of DigitalGlobe in the United States within a reasonable time in the future, which MDA suggested would be by the end of 2019.

On January 25, 2017, DigitalGlobe and Party A entered into a nondisclosure agreement (which nondisclosure agreement included a customary standstill provision that automatically terminated upon DigitalGlobe’s entry into the merger agreement).

On January 26, 2017, members of the management teams and financial advisors of DigitalGlobe and MDA met to conduct financial diligence on MDA.

On January 26, 2017, after discussions with members of the DigitalGlobe board of directors and each of the members of the Transactions Committee, Mr. Tarr called Mr. Lance to reject MDA’s January 22, 2017 proposal and communicate that such proposal was viewed by DigitalGlobe as inferior to MDA’s December 2, 2016 indication of interest.

On January 26, 2017, representatives of PJT Partners contacted representatives of Party E to assess its interest in a potential equity investment in DigitalGlobe.

On January 26, 2017, the DSS executed the Security Control Agreement with MDA and Holdings, establishing a formal, agreed-upon structure to mitigate foreign ownership, control or influence (“FOCI”) issues

 

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associated with MDA’s ownership of Holdings. The Security Control Agreement was the result of many months of negotiations and discussions between DSS, MDA and Holdings. The Security Control Agreement allows Holdings and its U.S. subsidiaries to hold facility security clearances to perform classified work for the U.S. Government.

On January 26, 2017, the Transactions Committee held a meeting, with representatives of PJT Partners and O’Melveny present, at which meeting Mr. Tarr led the Transactions Committee in discussions regarding the status of discussions with strategic parties and informed the Transactions Committee that Party C and Party D had ceased discussions with DigitalGlobe. Representatives of PJT Partners reviewed with the Transactions Committee PJT Partners’ conversations with representatives of Party E and Mr. Tarr indicated that DigitalGlobe’s management team was preparing for a meeting with Party E to assist Party E as it considered a strategic equity investment in DigitalGlobe. Extensive discussion then ensued among the directors. Also at this meeting, the Transactions Committee approved the engagement of Barclays as an additional financial advisor to DigitalGlobe, subject to negotiation by management of an acceptable engagement letter with Barclays. Among other reasons for engaging Barclays, the Transactions Committee was of the opinion that Barclays would be well-suited to advise on MDA’s business.

On January 27, 2017, Mr. Lance called Mr. Tarr and delivered a final proposal to acquire DigitalGlobe for a combination of $17.50 in cash and MDA common shares equal to $17.50, per share of DigitalGlobe common stock, as determined by the trading price of MDA common shares at the time of announcement of the transaction (based on a measurement period to be determined by the parties). Mr. Tarr informed Mr. Lance that he expected the DigitalGlobe board of directors would meet that weekend to consider MDA’s revised proposal. Mr. Tarr promptly communicated MDA’s revised proposal to members of the DigitalGlobe board of directors individually.

On January 27, 2017, members of the management team of DigitalGlobe and representatives of PJT Partners met with Party A and made a presentation regarding the DigitalGlobe business.

On January 28, 2017, the Transactions Committee held a meeting, with representatives of each of O’Melveny, Barclays and PJT Partners present, at which meeting Mr. Tarr updated the Transactions Committee on the status of discussions with MDA, Party A and Party E. In addition, representatives of PJT Partners reviewed for the Transactions Committee the terms of MDA’s January 27, 2017 proposal.

On January 29, 2017, the DigitalGlobe board of directors held a meeting, with representatives of each of O’Melveny, Barclays and PJT Partners present, at which meeting representatives of PJT Partners reviewed with the board of directors a history of the discussions with MDA, Party A, Party B, Party C, Party D and Party E, and presented to the board of directors a comparison of MDA’s January 27, 2017 proposal and its previous proposals, including discussions of the implied consideration and premiums, and key assumptions related to financial projections and the proposed combination of MDA and DigitalGlobe. Representatives of O’Melveny reviewed with the DigitalGlobe board of directors its fiduciary duties in connection with a proposed transaction, its confidentiality obligations, and certain regulatory reviews and approvals that would be required by the proposed transaction with MDA. The DigitalGlobe board of directors also discussed alternatives to a transaction with MDA and the other strategic parties, including continuing as a standalone business. At the conclusion of the meeting, after extensive discussion among the directors, the DigitalGlobe board of directors unanimously determined that management should continue to engage with MDA to explore a potential combination with MDA on the basis of the terms set forth in MDA’s January 27, 2017 revised oral proposal.

On January 30, 2017, Mr. Tarr informed Mr. Lance that the DigitalGlobe board of directors had expressed interest in MDA’s revised proposal, subject to negotiation of definitive documentation and completion of due diligence. Later that day, Mr. Lance, William McCombe, Senior Vice President, Chief Financial Officer and Treasurer of Holdings, and Michelle Kley, Senior Vice President, Chief Legal and Compliance Officer of Holdings, spoke by telephone with Mr. Tarr, Gary W. Ferrera, Executive Vice President and Chief Financial Officer of DigitalGlobe and Daniel Jablonsky, DigitalGlobe’s Senior Vice President and General Counsel, to discuss transaction logistics, including continuing due diligence.

 

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On January 29 and 30, 2017, calls between executives of DigitalGlobe and MDA were held to discuss MDA’s commitment to domicile the ultimate parent of DigitalGlobe in the United States by the end of 2019, the timing and process for regulatory reviews and approvals, next steps regarding a draft merger agreement and certain tax matters.

On January 31, 2017, the electronic data room for MDA was opened to representatives of DigitalGlobe and its advisors.

On January 31, 2017, representatives of O’Melveny, on behalf of DigitalGlobe, contacted representatives of Vinson & Elkins and Stikeman, on behalf of MDA, to relay certain high-level expectations DigitalGlobe had for the proposed transaction and the merger agreement, including with respect to structure, scope of representations and warranties, covenants and deal protections, the expectation to have committed financing with no financing condition, DigitalGlobe’s expectation for a substantial reverse termination fee if regulatory approvals were not obtained, the importance to DigitalGlobe of MDA’s commitment to domicile the ultimate parent of DigitalGlobe in the United States by the end of 2019, proportionate representation of DigitalGlobe directors on the MDA board of directors and its committees, the importance of deal certainty and limited conditionality to the DigitalGlobe board of directors and the Transactions Committee, and DigitalGlobe’s plans to consider adoption of an exclusive forum bylaw provision. O’Melveny also raised some due diligence questions about MDA’s commitment to domicile the ultimate parent of DigitalGlobe in the United States by the end of 2019, the plan for dual-listing of MDA common shares on the TSX and a U.S. securities exchange and the form of registration statement that MDA would use with respect to the shares issued as consideration in the proposed transaction.

On the evening of January 31, 2017, Messrs. Tarr and Lance met to discuss the potential transaction, including the composition of the MDA board of directors following the closing of the potential transaction and MDA’s commitment to domicile the ultimate parent of DigitalGlobe in the United States by the end of 2019.

On January 31, 2017, members of the DigitalGlobe management team met with employees of Party E to discuss an equity investment by Party E in DigitalGlobe.

On February 1, 2017, members of the DigitalGlobe management team had an additional meeting with a principal of Party E to discuss an equity investment by Party E in DigitalGlobe.

On February 1, 2017, representatives of Vinson & Elkins and O’Melveny discussed regulatory considerations in connection with an acquisition of DigitalGlobe by MDA.

On February 1, 2017, Messrs. Tarr and Lance discussed the structure of the proposed acquisition and the anticipated timing thereof.

On February 1, 2017, DigitalGlobe entered into a nondisclosure agreement with Party E (which nondisclosure agreement included a customary standstill provision that automatically terminated upon DigitalGlobe’s entry into the merger agreement).

On February 2, 2017, Messrs. Tarr and Lance exchanged email correspondence regarding MDA’s proposed acquisition of DigitalGlobe and the timing for MDA’s commitment to domicile the ultimate parent of DigitalGlobe in the United States. Messrs. Tarr and Lance spoke by telephone on February 3, 2017 regarding the same topics.

On February 2 and 4, 2017, representatives of O’Melveny and Vinson & Elkins had calls to discuss diligence and regulatory matters.

During the week of February 6, 2017, the parties and their respective advisors continued their respective due diligence reviews of the other party, and over the weekend of February 10-12, 2017, each party provided the other with access to certain of its material contracts for the other to review.

 

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On February 6, 2017, members of the management team of DigitalGlobe met with representatives of Party A for an additional diligence session.

On February 6, 2017, the Transactions Committee held a meeting, with representatives of each of O’Melveny, Barclays and PJT Partners present, at which meeting representatives of PJT Partners updated the Transactions Committee on the status of discussions with MDA, Party A and Party E. Also at this meeting, representatives of Barclays reviewed for the Transactions Committee certain information regarding MDA, including with respect to its business units, the commercial satellite business, and preliminary financial analyses of MDA. The Transactions Committee was also provided with the MDA Forecasts and the DigitalGlobe Revised MDA Forecasts. Representatives of PJT Partners and Barclays presented their respective preliminary financial analyses of an acquisition of DigitalGlobe by MDA to the Transactions Committee and extensive discussion ensued. Representatives of O’Melveny updated the Transactions Committee regarding the regulatory approvals that may be required in connection with the transaction, including in the United States. Also at this meeting, the key terms of the draft engagement letters with each of PJT Partners and Barclays and the relationship disclosures made by each of PJT Partners and Barclays were reviewed by the Transactions Committee.

On February 8, 2017, representatives of Vinson & Elkins, on behalf of MDA, distributed an initial draft merger agreement to O’Melveny, which initial draft did not provide for a regulatory termination fee payable to DigitalGlobe if certain required regulatory approvals were not obtained.

On February 8, 2017, the Transactions Committee held a meeting, with representatives of each of O’Melveny, Barclays and PJT Partners present, at which meeting Mr. Tarr updated the Transactions Committee on discussions with Mr. Lance regarding MDA’s commitment to domicile the ultimate parent of DigitalGlobe in the United States by the end of 2019. Also at this meeting, representatives of PJT Partners updated the Transactions Committee on discussions with Party A and Party E and representatives of Barclays updated the Transaction Committee on their review of the MDA business. In addition, DigitalGlobe management and the Transactions Committee discussed DigitalGlobe’s need for deal certainty in connection with the potential transaction with MDA, including the need for a regulatory termination fee payable to DigitalGlobe upon a failure to receive the necessary regulatory approvals and a public commitment from MDA to domicile the ultimate parent of DigitalGlobe in the United States by the end of 2019. At the conclusion of the meeting, the Transactions Committee reviewed the proposed engagement letters for each of PJT Partners and Barclays and unanimously authorized and approved the execution of each such engagement letter by DigitalGlobe.

During the afternoon of February 8, 2017, a representative of Party A informed a representative of PJT Partners that Party A was not interested in pursuing further discussions with DigitalGlobe regarding a potential acquisition of DigitalGlobe as it did not believe that it could offer the DigitalGlobe shareowners a premium over the then current trading price per share of DigitalGlobe common stock.

On February 9, 2017, DigitalGlobe held a meeting of its board of directors, with representatives of each of O’Melveny, Barclays and PJT Partners present, at which meeting representatives of PJT Partners updated the board of directors on discussions with MDA, Party A and Party E. With respect to Party E, the representatives of PJT Partners informed the DigitalGlobe board of directors that Party E had put its consideration of a potential equity investment in DigitalGlobe on hold for the time being. From that point and until the announcement of the merger, Party E did not communicate any further interest in a potential equity investment in DigitalGlobe. Also at this meeting, representatives of O’Melveny reviewed with the DigitalGlobe board of directors its fiduciary duties in connection with its consideration of an acquisition transaction and discussed certain regulatory approvals that would be required in a transaction with MDA. Representatives of Barclays presented to the DigitalGlobe board of directors Barclays’ views regarding the commercial satellite business generally, preliminary financial analyses of pro forma valuation of MDA common shares and the prospects of the combined pro forma entity. The DigitalGlobe board of directors also discussed the prospects for DigitalGlobe as a standalone business. In considering the prospects of DigitalGlobe as a standalone business, the DigitalGlobe board of directors

 

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considered, among other factors, historical information regarding DigitalGlobe’s business, financial performance and results of operations, the market prices and trading multiples with respect to aerospace and defense industry participants, satellite industry participants and general market indices and current information regarding DigitalGlobe’s business, prospects, financial condition, operations, technology, products, services, management, competitive position, business concentration levels, capital intensity and returns and strategic business goals and objectives. The DigitalGlobe board of directors also considered the prospects and likelihood that DigitalGlobe could realize superior benefits through remaining an independent company and the risks associated with remaining an independent company. Extensive discussion among the DigitalGlobe directors ensued.

On February 11, 2017, with the consent of MDA, Mr. Tarr met with a representative of a U.S. government customer of DigitalGlobe to inform him on a confidential basis of discussions with MDA and MDA’s intent to domicile the ultimate parent of DigitalGlobe in the United States by the end of 2019. Subsequently, with the consent of MDA, Mr. Tarr contacted certain other U.S. government representatives to inform them, on a confidential basis, of discussions between DigitalGlobe and MDA regarding a potential business combination transaction.

On February 12, 2017, the Transactions Committee held a meeting, with representatives of each of O’Melveny, Barclays and PJT Partners present, at which meeting Mr. Tarr updated the Transactions Committee on his February 11, 2017 discussions with the U.S. government customer. A representative of PJT Partners informed the Transactions Committee that neither Party A nor Party E had contacted a representative of PJT Partners regarding a transaction since the DigitalGlobe board of directors meeting on February 9, 2017. Representatives of O’Melveny discussed the key issues in the draft merger agreement provided by MDA on February 8, 2017 with the Transactions Committee, including the provisions with respect to deal certainty.

On February 13, 2017, DigitalGlobe and PJT Partners entered into an engagement letter with respect to PJT Partners’ engagement as financial advisor to DigitalGlobe, and DigitalGlobe and Barclays entered into an engagement letter with respect to Barclays’ engagement as an additional financial advisor to DigitalGlobe.

On February 13, 2017, representatives of O’Melveny, on behalf of DigitalGlobe, submitted to representatives of Vinson & Elkins a markup of the draft merger agreement. The revised draft, among other things, (i) made the representations and warranties and interim operating covenants largely reciprocal, (ii) included a non-solicitation covenant applicable to MDA, (iii) included additional covenants related to financing and MDA’s commitment to domicile the ultimate parent of DigitalGlobe in the United States by the end of 2019, (iv) provided for a heightened regulatory efforts covenant and a reverse termination fee in the event that regulatory approvals were not obtained, (v) provided for increased representation of DigitalGlobe’s existing directors on the MDA board of directors and its committees following closing, (vi) removed any conditions to closing related to third party consents, (vii) narrowed the definition of company material adverse effect and (viii) provided that all of the equity awards of DigitalGlobe would be deemed accelerated and paid the merger consideration upon closing of the proposed transaction.

On February 13, 2017, Mr. Tarr spoke with Mr. Lance by telephone regarding overall transaction timing, MDA’s commitment to domicile the ultimate parent of DigitalGlobe in the United States by the end of 2019 and public messaging regarding the potential business combination transaction.

On February 14, 2017, members of MDA’s management, KPMG LLP, MDA’s outside tax advisors, Vinson & Elkins, Stikeman, members of DigitalGlobe’s management, and representatives of each of PJT Partners, Barclays and O’Melveny conducted a diligence review of certain MDA tax matters by telephone.

On February 15, 2017, representatives of O’Melveny, on behalf of DigitalGlobe, delivered further revisions to the merger agreement to representatives of Vinson & Elkins, primarily related to additional representations and warranties that DigitalGlobe was seeking from MDA.

 

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On February 15, 2017, representatives of PJT Partners spoke with representatives of BofA Merrill Lynch by telephone regarding high-level issues on the markup of the draft merger agreement and the transaction process with a focus on termination provisions.

On February 16, 2017, representatives of each of BofA Merrill Lynch, Vinson & Elkins and Stikeman held a conference call with representatives of PJT Partners and O’Melveny to discuss several key open points in the merger agreement including DigitalGlobe’s request that MDA pay a substantial reverse termination fee if regulatory approvals were not obtained, the treatment of DigitalGlobe equity awards in the transaction, the establishment of a retention bonus pool for certain DigitalGlobe employees, the makeup of the MDA board of directors after closing, the scope of the representations and warranties, interim operating covenants, MDA’s covenants with respect to its commitment to domicile the ultimate parent of DigitalGlobe in the United States by the end of 2019 and certain deal protection provisions.

Later on February 16, 2017, representatives of Vinson & Elkins, on behalf of MDA, presented to representatives of O’Melveny a list of key issues contained in the draft merger agreement.

On the evening of February 16, 2017, a representative of PJT Partners contacted representatives of BofA Merrill Lynch and advised that DigitalGlobe was unwilling to proceed unless MDA agreed to certain conditions to deliver greater certainty to close, either through a significant reverse termination fee in the event that required regulatory approvals were not obtained, or a strong covenant to obtain such regulatory approvals, or some combination of the two.

On February 17, 2017, various media reports were published stating that MDA was in talks to acquire DigitalGlobe.

On February 17, 2017, the Transactions Committee held a meeting, with representatives of each of O’Melveny, PJT Partners and Barclays present, at which meeting Mr. Tarr led discussions regarding the news publications concerning MDA and DigitalGlobe. Mr. Tarr also updated the Transactions Committee on his discussions with representatives of a U.S. government customer from earlier that day. The Transactions Committee discussed with DigitalGlobe’s management team the status of negotiations of the merger agreement with MDA and reiterated the need for deal certainty. Also at this meeting, representatives of O’Melveny reviewed with directors their fiduciary duties in connection with a potential sale of DigitalGlobe. Extensive discussion ensued among the Transactions Committee.

On February 17, 2017, representatives of Vinson & Elkins, on behalf of MDA, distributed draft commitment papers for MDA’s financing of the proposed acquisition of DigitalGlobe to representatives of O’Melveny.

On February 17, 2017, Mr. Lance contacted Mr. Tarr to offer a regulatory termination fee of $50 million payable to DigitalGlobe in certain circumstances, but that MDA would not agree to the regulatory covenants in the revised DigitalGlobe draft of the merger agreement. MDA instead required that the merger agreement reflect the proposed regulatory covenants set forth in its initial February 8, 2017 draft of the merger agreement, which permitted MDA and Merger Sub to reject, as a condition to obtaining any required regulatory approvals, any requirement to divest or hold separate (or the imposition of any other condition or restriction with respect to) any assets or operations of DigitalGlobe, MDA, Merger Sub or their respective affiliates. Mr. Tarr, Mr. Lance and Dr. Walter S. Scott, DigitalGlobe’s Executive Vice President and Founder, Chief Technical Officer and Executive Leader of Platform and Services, also spoke by video conference to discuss diligence matters and Dr. Scott’s history with DigitalGlobe.

During the morning of February 18, 2017, DigitalGlobe held a board of directors meeting, with representatives of each of O’Melveny, PJT Partners and Barclays present, at which meeting Mr. Tarr informed the board of directors of MDA’s February 17, 2017 proposal on regulatory matters. At this meeting, the DigitalGlobe board of directors unanimously agreed to reject MDA’s regulatory proposal, including the $50 million regulatory termination fee.

 

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Later on February 18, 2017, Mr. Tarr advised Mr. Lance that the DigitalGlobe board of directors had rejected MDA’s February 17, 2017 proposal regarding regulatory matters.

During the afternoon of February 18, 2017, DigitalGlobe held a subsequent meeting of its board of directors, with representatives of each of O’Melveny, Barclays and PJT Partners present. At this meeting, representatives of PJT Partners informed the DigitalGlobe board of directors that Mr. Lance had contacted representatives of PJT Partners following Mr. Lance’s conversation with Mr. Tarr regarding the significance to DigitalGlobe of addressing deal certainty matters. Representatives of BofA Merrill Lynch also spoke with representatives of each of PJT Partners and Barclays by telephone regarding the same topic.

On February 19, 2017, representatives of O’Melveny, on behalf of DigitalGlobe distributed to representatives of Vinson & Elkins a markup of certain provisions of the merger agreement related to the regulatory covenants, regulatory termination fee and related provisions of the draft merger agreement.

On February 19, 2017, representatives of Vinson & Elkins, on behalf of MDA, circulated to DigitalGlobe and representatives of O’Melveny MDA’s revised proposal on regulatory matters, which proposal provided for a $150 million regulatory termination fee payable to DigitalGlobe in certain circumstances and a reasonable best efforts covenant to obtain all required regulatory approvals, subject to certain conditions. During the evening of February 19, 2017, representatives of each of MDA, DigitalGlobe, Vinson & Elkins, Stikeman, O’Melveny, BofA Merrill Lynch, PJT Partners and Barclays discussed this revised regulatory approval proposal by telephone as well as other open issues in the draft merger agreement.

On February 20, 2017, the Transactions Committee held a meeting, with representatives of each of O’Melveny, PJT Partners and Barclays present, during which the Transactions Committee reviewed and discussed MDA’s revised proposal from February 19 and members of DigitalGlobe’s management team and representatives from O’Melveny updated the Transactions Committee on the status of merger agreement negotiations. At the conclusion of the meeting, the Transactions Committee authorized management and the outside advisors to continue their negotiations with MDA.

On February 20, 2017, representatives of each of Vinson & Elkins and O’Melveny spoke by telephone to discuss MDA’s proposal on regulatory approvals with the aim of better understanding each party’s position.

On February 20, 2017, representatives of O’Melveny, on behalf of DigitalGlobe, distributed their comments to MDA’s financing papers to representatives of Vinson & Elkins.

On February 20, 2017, representatives of O’Melveny, on behalf of DigitalGlobe, distributed further revisions to the draft merger agreement to representatives of Vinson & Elkins. Representatives of each of O’Melveny and Vinson & Elkins, on behalf of DigitalGlobe and MDA, respectively, continued negotiations of the draft merger agreement and later that evening, representatives of Vinson & Elkins delivered a revised draft of the merger agreement to O’Melveny.

On February 20, 2017, Mr. Tarr and a representative of Party A had a call in which Party A indicated an interest in pursuing an undefined joint venture arrangement with DigitalGlobe in the future, but that Party A was not able to pursue any such transaction in the near term.

On February 21, 2017, representatives of Vinson & Elkins, on behalf of MDA, sent a revised draft of the merger agreement to representatives of O’Melveny and negotiations continued between representatives of each of O’Melveny and Vinson & Elkins regarding the merger agreement.

On February 21, 2017, representatives of each of O’Melveny and Vinson & Elkins discussed certain termination right provisions in the merger agreement and the interim operating covenants applicable to DigitalGlobe. Later that afternoon, Ms. Kley, and representatives of Vinson & Elkins and Stikeman held a conference call with Mr. Jablonsky and representatives of O’Melveny to discuss several open points on the merger agreement.

 

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On February 21, 2017, the Transactions Committee held a meeting, with representatives of each of O’Melveny, PJT Partners and Barclays present, during which members of DigitalGlobe’s management team and representatives of O’Melveny updated the Transactions Committee on the status of diligence matters and merger agreement negotiations, and summarized and explained the key terms of the latest draft of the merger agreement. Mr. Tarr also updated the Transactions Committee on Mr. Tarr’s call with Party A.

On February 21, 2017, Mr. Lance called Mr. Tarr to inform him that it was his position that the exchange ratio for the stock consideration of the deal should be based on the unaffected MDA and DigitalGlobe share prices as of February 16, 2017, the day before numerous media outlets reported that MDA and DigitalGlobe were in advanced discussions.

On February 21, 2017, Mr. Zervigon, members of DigitalGlobe’s management team, and PJT Partners spoke by telephone to discuss Mr. Lance’s proposal regarding the exchange ratio and concluded that it was consistent with their expectations.

Later in the evening on February 21, 2017, representatives of O’Melveny, on behalf of DigitalGlobe, sent a revised draft of the draft merger agreement to representatives of Vinson & Elkins.

During the evening of February 21, 2017, representatives of each of MDA, Vinson & Elkins, DigitalGlobe and O’Melveny, discussed certain open provisions of the merger agreement mainly related to regulatory approvals, treatment of equity awards in the transaction, the non-solicitation covenants and certain of MDA’s termination rights.

On February 21 and 22, 2017, Messrs. Tarr and Lance spoke by telephone regarding transaction status and timing.

On February 22, 2017, the Compensation Committee of the DigitalGlobe board of directors (the “Compensation Committee”) held a meeting, at which meeting representatives of O’Melveny were present, to review the proposed treatment of equity awards in the draft merger agreement and discuss employee retention matters. The Compensation Committee expressed its support for the proposed treatment of the DigitalGlobe equity awards as set forth in the draft merger agreement.

On February 22, 2017, DigitalGlobe held a board of directors meeting, with representatives of each of O’Melveny, PJT Partners and Barclays present, at which meeting representatives of O’Melveny again reviewed with the board of directors its fiduciary duties with respect to the potential sale of DigitalGlobe, the material terms of the draft merger agreement and the proposed amendment to DigitalGlobe’s amended and restated bylaws to provide for Delaware as its exclusive forum for certain litigation involving DigitalGlobe. Representatives of each of PJT Partners and Barclays separately presented to the DigitalGlobe board of directors their respective financial analyses regarding the proposed business combination. Representatives of each of PJT Partners and Barclays informed the DigitalGlobe board of directors that each of PJT Partners and Barclays was prepared to deliver to the DigitalGlobe board of directors their respective fairness opinions upon finalization of the draft merger agreement.

On February 22, 2017, representatives of Vinson & Elkins, on behalf of MDA, provided representatives of O’Melveny with the proposed exchange ratio of 0.3132, which O’Melveny, after discussion with DigitalGlobe, Barclay’s and PJT Partners, subsequently confirmed.

On February 22, 2017, representatives of each of O’Melveny and Vinson & Elkins exchanged revised drafts of the merger agreement.

During the evening of February 22 and during the day on February 23, 2017, members of the MDA management team met in person with members of the DigitalGlobe management team to finalize open issues in the draft merger agreement. Representatives of each of PJT Partners and BofA Merrill Lynch also participated in these meetings.

 

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On February 23, 2017, representatives of each of MDA, DigitalGlobe, Vinson & Elkins, O’Melveny, BofA Merrill Lynch, Barclays, and PJT Partners spoke by telephone to discuss the remaining open issues in the draft merger agreement and the accompanying draft disclosure schedules of MDA and DigitalGlobe.

Throughout the day on February 23, 2017, representatives of each of O’Melveny and Vinson & Elkins exchanged revisions to the merger agreement on behalf of DigitalGlobe and MDA, respectively.

On February 23, 2017, DigitalGlobe held a board of directors meeting, with representatives of each of O’Melveny, PJT Partners and Barclays present, at which meeting Mr. Tarr provided the board of directors with an update on the status of merger agreement negotiations. In addition, representatives of each of PJT Partners and Barclays confirmed that PJT Partners and Barclays remained prepared to deliver their respective fairness opinions to the DigitalGlobe board of directors upon finalization of the draft merger agreement.

On February 23, 2017, following the DigitalGlobe board of directors meeting, O’Melveny reported to Vinson & Elkins and MDA senior management that the DigitalGlobe board of directors was prepared to continue negotiating the proposed transaction, subject to finalizing the definitive documentation. After subsequent discussions among the parties, representatives of each of MDA, DigitalGlobe, Vinson & Elkins and O’Melveny agreed on the final form of the merger agreement for submission to the board of directors of each of MDA and DigitalGlobe.

During the afternoon of February 23, 2017, the MDA board of directors unanimously determined that the merger agreement and the consummation of the transactions contemplated thereby, including the merger, were in the best interests of MDA, approved the merger agreement and the transactions contemplated thereby and resolved to recommend that the MDA shareholders vote in favor of the issuance of MDA common shares in connection with the merger agreement. That same day, the board of directors of Merger Sub and of Holdings each approved the merger agreement by written consent.

Following this meeting of the MDA board of directors, representatives of Vinson & Elkins advised O’Melveny that the MDA board of directors had unanimously approved the proposed transaction and delivered to representatives of O’Melveny final versions of financing commitment letters from Royal Bank of Canada, RBC Capital Markets, Bank of America, N.A. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, providing for MDA’s debt financing of the proposed business combination.

During the evening of February 23, 2017, DigitalGlobe held a meeting of its board of directors, with representatives of each of O’Melveny, PJT Partners and Barclays present, to consider the terms of the final proposed business combination with MDA and the final form of merger agreement. At this meeting, the changes made to the draft merger agreement following the previous DigitalGlobe board of directors meeting were reviewed with the board of directors and each of PJT Partners and Barclays delivered oral fairness opinions, which were subsequently confirmed in writing, to the effect that, as of that date and based on and subject to various assumptions and limitations described in their respective opinions, the merger consideration to be received by holders of DigitalGlobe common stock (other than, to the extent applicable, DigitalGlobe, its subsidiaries, MDA and its affiliates) was fair, from a financial point of view, to holders of DigitalGlobe common stock. After discussion among the directors, the DigitalGlobe board of directors unanimously voted to approve and adopt the merger agreement with MDA, and instructed management to sign and deliver the merger agreement on behalf of DigitalGlobe.

Early on the morning of February 24, 2017, MDA and the lenders executed the financing commitment letters.

Prior to the opening of the financial markets in the United States on February 24, 2017, MDA and DigitalGlobe entered into the merger agreement and issued a joint press release announcing the proposed merger and the timing of a joint conference call for the investment community to discuss the proposed merger.

 

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Board of Directors of MDA after the Merger

Pursuant to the merger agreement, at the effective time, the MDA board of directors is required to appoint three individuals (each a “DigitalGlobe designee”) as mutually agreed upon in good faith by MDA and DigitalGlobe (each of whom must have been serving as a director of DigitalGlobe as of February 24, 2017) and reasonably approved by the Governance and Nominating Committee of the MDA board of directors to serve on the MDA board of directors. The MDA board of directors is also required under the merger agreement to take all actions necessary so that at the effective time the total number of directors serving on the MDA board of directors will not be more than twelve, including the three DigitalGlobe designees. Additionally, at least one of the DigitalGlobe designees will be appointed to each of the MDA board of directors’ Audit Committee, Human Resources and Management Compensation Committee and Governance and Nominating Committee. MDA and DigitalGlobe have agreed that, subject to the approval of the Governance and Nominating Committee of MDA, General Howell M. Estes, III, Dr. L. Roger Mason, Jr. and Nick S. Cyprus will be appointed to serve as MDA directors upon consummation of the merger. In addition, it is expected that, as of the effective time, General Estes will be appointed as a member of MDA’s Human Resources and Management Compensation Committee, Dr. Mason will be appointed as a member of MDA’s Governance and Nominating Committee and Mr. Cyprus will be appointed as a member of MDA’s Audit Committee.

In lieu of appointing the DigitalGlobe designees to the MDA board at the effective time, such individuals will be nominated for election at the MDA meeting to the MDA board at the effective time.

Additionally, at the effective time, and subject to certain qualifications, MDA is required to cause Holdings to appoint two individuals who are DigitalGlobe designees as mutually agreed upon by MDA and DigitalGlobe and reasonably approved by the Governance and Nominating Committee of the MDA board of directors to serve on the Holdings board of directors (the appointment of each being subject to approval by DSS). In order for a DigitalGlobe designee to be appointed to the Holdings board of directors, such person must qualify as an “Outside Director” (as defined in that certain Security Control Agreement, dated January 26, 2017, by and among MDA, Holdings and the U.S. Department of Defense, which we refer to as the “Security Control Agreement”) and satisfy the other director requirements set forth in the Security Control Agreement. MDA and Holdings are also required under the merger agreement to take all actions necessary so that at the effective time the total number of directors serving on the Holdings board of directors on the closing date will not be more than seven, including the two DigitalGlobe designees.

At this time, it has not yet been determined who will serve as directors or executive officers of the surviving corporation.

Information about those individuals who are eligible to be appointed as DigitalGlobe designees to each of the MDA board of directors and the Holdings board of directors is incorporated herein by reference from DigitalGlobe’s proxy statement for its 2016 annual meeting of shareowners filed with the SEC on April 14, 2016.

Information about MDA’s current directors and executive officers can be found in the section entitled “Additional Information about MDA.

MDA’s Reasons for the Merger

At its meeting held on February 23, 2017, after due consideration and consultation with MDA’s management and outside legal and financial advisors, the MDA board of directors unanimously approved the merger agreement and the transactions contemplated thereby and authorized the issuance of MDA common shares pursuant to the merger agreement. In doing so, the MDA board of directors considered the business, assets, liabilities, results of operations, financial performance, strategic direction and prospects of DigitalGlobe

 

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and MDA. Additionally, in making its determination, the MDA board of directors considered a number of factors, including, but not limited to, the following:

 

    MDA expects the combination of MDA’s and DigitalGlobe’s technology will provide vertical integration benefits, including lower costs, increased speed-to-market, and enhanced analytics capabilities;

 

    MDA expects the acquisition of DigitalGlobe will expand MDA’s ability to penetrate its existing markets and open channels for growth in adjacent markets;

 

    MDA expects the transaction to be accretive to MDA’s adjusted operating earnings per share in 2018;

 

    MDA expects that the combined company will deliver meaningful revenue and cost synergies of C$75-150 million on a run-rate basis by 2019;

 

    MDA expects cost synergies to include elimination of duplicative public company costs, procurement cost savings, efficiencies gained by leveraging the manufacturing capabilities of Space Systems/Loral, LLC, a wholly owned subsidiary of Holdings, which we refer to as “SSL,” for future Earth observation satellite constellations, and the operational benefits of increased scale;

 

    MDA expects revenue synergies to include accelerating SSL’s penetration into U.S. government markets, international market expansion, cross-selling opportunities and the ability to target larger geospatial services contract awards;

 

    the combination of MDA’s and DigitalGlobe’s respective businesses is expected to add revenue, product and customer diversity to MDA following completion of the merger;

 

    MDA expects that the combination of MDA and DigitalGlobe will provide increased scale to their services businesses which will allow the combined company to better serve larger customer programs and address more complex customer mission needs;

 

    MDA expects that the acquisition will provide it with greater access to U.S. and Canadian government and international customers and strengthen the position of MDA in the United States;

 

    MDA expects that the acquisition will accelerate MDA’s previously announced United States access strategy and allow it to more effectively serve the U.S. government space markets and customers;

 

    MDA expects that the scale, quality and investor value proposition of MDA and its listing on the NYSE or NASDAQ following completion of the merger will attract additional investor interest;

 

    MDA believes that the seasoned management team at DigitalGlobe will bring valuable talent to the operations of the combined company;

 

    the belief that MDA and DigitalGlobe have similar corporate cultures and values;

 

    the fact that in connection with the transaction, MDA will become a publicly traded company in the United States, which is expected to provide MDA with greater access to capital and future financing sources;

 

    the fact that the exchange ratio is fixed with respect to the stock consideration and will not be adjusted for fluctuations in the market price of MDA common shares and DigitalGlobe common stock;

 

    the ability of MDA, in specified circumstances, to provide information to and to engage in discussions or negotiations with a third party that makes an unsolicited acquisition proposal with respect to MDA, as further described in the section entitled “The Merger Agreement—No-Solicitation”;

 

    the ability of the MDA board of directors, in specified circumstances, to make a change in recommendation to MDA shareholders concerning the merger, as further described in the section entitled “The Merger Agreement—Board Recommendation”;

 

    the belief that required regulatory approvals from various governmental entities, including CFIUS, DSS, DDTC, FCC, NOAA, FTC and the Antitrust Division are expected to be received prior to the end date. For more information about the status of these applications, see the section entitled “The Merger Proposal—Regulatory Approvals Required for the Merger”;

 

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    other favorable terms of the merger agreement, including:

 

    restrictions on DigitalGlobe’s ability to solicit alternative transactions and to provide confidential information to, or engage in discussions with, a third party interested in pursuing an alternative transaction with DigitalGlobe, as further discussed in the section entitled “The Merger Agreement—No Solicitation”;

 

    the obligation of DigitalGlobe to pay MDA a termination fee of $85 million upon termination of the merger agreement under specified circumstances; and

 

    the obligation of DigitalGlobe to reimburse MDA for its out-of-pocket expenses, subject to a maximum amount of $10 million, if the merger agreement is terminated due to the failure to obtain DigitalGlobe shareowner approval termination right; and

 

    the probability that the conditions to the merger will be satisfied.

In connection with its deliberations relating to the merger, the MDA board of directors also considered potential risks and negative factors concerning the merger and the other transactions contemplated by the merger agreement, including, but not limited to, the following:

 

    the risk that the merger might not be completed in a timely manner or at all;

 

    the effect that the length of time from announcement until closing could have on the market price of MDA common shares, MDA’s operating results (particularly in light of the significant costs incurred in connection with the merger) and the relationships with MDA’s employees, shareholders, customers, suppliers, regulators, partners and others that do business with MDA;

 

    the risk that the anticipated benefits of the merger will not be realized in full or in part, including the risk that expected synergies will not be achieved or will not be achieved in the expected time frame;

 

    the risk that the regulatory approval process could result in a rejection of the merger, the imposition of undesirable conditions or burdensome terms (including an “Extraordinary Condition” as defined in “The Merger Proposal—Regulatory Approvals Required for the Merger”) or increased pre-tax transaction costs;

 

    the fact that the merger agreement provides for a fixed exchange ratio with respect to the stock consideration and that no adjustment will be made in the merger consideration to be received by DigitalGlobe shareowners in the merger as a result of a possible increase in the trading price of MDA’s common shares, while noting that the significant cash portion of the merger consideration will reduce the impact of an increase in the trading price of MDA common shares on the value of the merger consideration;

 

    the risk of diverting the attention of MDA’s senior management from other strategic priorities to implement the merger and make arrangements for integration of MDA’s and DigitalGlobe’s operations and infrastructure following the merger;

 

    certain restrictions on the conduct of MDA’s business during the pendency of the merger, including restrictions on MDA’s ability to solicit alternative transactions, although the MDA board of directors believed that such restrictions were reasonable;

 

    the risk that any inability to maintain the current management team of DigitalGlobe could affect the operations of DigitalGlobe following the merger, as MDA recognizes the value of DigitalGlobe’s management and expertise in operating DigitalGlobe’s business;

 

    the fact that the merger agreement provides for the ability of the DigitalGlobe board of directors to, under certain circumstances, in a manner adverse to MDA, withhold, change, amend, modify or qualify its recommendation that DigitalGlobe shareowners approve the merger agreement;

 

    the risk that if the merger agreement is terminated, MDA may be obligated to pay a termination fee of US$85 million or a reverse termination fee of US$150 million under certain circumstances;

 

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    the enhanced regulatory burden and risk of exposure to litigation and regulatory action as a result of MDA becoming a registrant with the SEC and having its common shares listed on the NYSE or NASDAQ;

 

    the absence of a financing condition and DigitalGlobe’s ability to specifically enforce MDA’s obligations under the merger agreement and associated risks relating to MDA’s merger financing plans;

 

    the inability of MDA to terminate the merger agreement to enter into an agreement for a superior proposal;

 

    the potential impact on the market price of MDA common shares as a result of the issuance of the stock consideration to DigitalGlobe shareowners; and

 

    the risks described in the section entitled “Risk Factors.

After consideration of these factors, the MDA board of directors determined that, overall, the potential benefits of the merger outweighed the potential risks.

The foregoing discussion of factors considered by the MDA board of directors is not intended to be exhaustive and may not include all the factors considered by the MDA board of directors. In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the MDA board of directors did not attempt to quantify, rank or otherwise assign any relative or specific weights to the factors that it considered in reaching its determination to approve the merger and the merger agreement. In addition, individual members of the MDA board of directors may have given differing weights to different factors. The MDA board of directors conducted an overall review of the factors described above and other material factors, including through discussions with, and inquiry of, MDA’s management and outside legal and financial advisors.

The foregoing description of MDA’s consideration of the factors supporting the merger is forward-looking in nature. This information should be read in light of the factors discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

DigitalGlobe’s Reasons for the Merger; Recommendation of the DigitalGlobe Board of Directors

At its meeting held on February 23, 2017, after due consideration and consultation with DigitalGlobe’s management and outside legal and financial advisors, the DigitalGlobe board of directors determined that the merger agreement was advisable and fair to, and in the best interests of, DigitalGlobe and its shareowners and unanimously approved and declared advisable the merger agreement and the merger. THE DIGITALGLOBE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT DIGITALGLOBE SHAREOWNERS VOTE “FOR” THE ADOPTION OF THE MERGER AGREEMENT.

In evaluating the merger agreement and the merger, the DigitalGlobe board of directors consulted with DigitalGlobe management, as well as DigitalGlobe’s legal and financial advisors, in reaching its decision to, among other things, approve the merger agreement and the merger and to recommend that DigitalGlobe shareowners adopt the merger agreement, and the DigitalGlobe board of directors considered a variety of factors, including the following material factors:

 

    historical information regarding (a) DigitalGlobe’s business, financial performance and results of operations, (b) market prices, volatility and trading activity with respect to DigitalGlobe common stock, and (c) market prices and trading multiples with respect to aerospace and defense industry participants, satellite industry participants and general market indices;

 

   

current information regarding (a) DigitalGlobe’s business, prospects, financial condition, operations, technology, products, services, management, competitive position, contract and customer business

 

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concentration levels, capital intensity and returns and strategic business goals and objectives, (b) DigitalGlobe’s capital expenditure budget and plans for building and deploying its next satellite constellation, (c) general economic, industry and financial market conditions, and (d) opportunities and competitive factors within DigitalGlobe’s industry;

 

    (a) historical information regarding MDA’s business and financial performance and market prices and the trading multiple of MDA common shares and (b) current information regarding MDA’s business, prospects, financial condition, operations, technology, products, services, management and competitive position;

 

    the efforts undertaken by DigitalGlobe, with the assistance of its financial advisors, to identify and engage since December 8, 2016 with other prospective parties identified as most likely to be interested in (and capable of) acquiring DigitalGlobe, including a review of management’s communications and dealings with other possible buyers in the past and assessment of the likelihood that a third party would offer a higher price than the price per share offered by MDA;

 

    the DigitalGlobe board of director’s belief, based on the advice and counsel of DigitalGlobe’s financial advisors, that financial sponsors would be constrained by their leverage models from being able to make a competitive offer for an acquisition of DigitalGlobe;

 

    the DigitalGlobe board of director’s, PJT Partners’ and Barclays’ familiarity with the aerospace and defense industries and satellite industry and possible other third parties who could potentially seek to acquire DigitalGlobe and the belief, including based on the process conducted with PJT Partners in reaching out to parties identified as most likely and most capable of acquiring DigitalGlobe and the feedback from each of the contacted parties rejecting an invitation to engage in acquisition discussions or advising DigitalGlobe or its financial advisors that such parties either were not interested in acquiring DigitalGlobe or believed that DigitalGlobe’s common stock trading price reflected full value for DigitalGlobe and that such parties were not interested in making a proposal in excess of the trading price of the DigitalGlobe common stock;

 

    the DigitalGlobe board of director’s belief, after conferring with its financial advisors, that the aggregate merger consideration to be paid by MDA in the merger is the maximum price (including the maximum cash consideration) that MDA was willing to offer in connection with the merger;

 

    the timing of the merger and the risk that if DigitalGlobe did not accept the MDA offer (as provided for in the merger agreement), it may not have another opportunity to do so or a comparable opportunity with another qualified party;

 

    (a) the belief of the DigitalGlobe board of directors that continuing with the strategic process was unlikely to result in a transaction at a more attractive price than offered by MDA in the merger, (b) the fact that, under the terms of the merger agreement, the DigitalGlobe board of directors would be permitted to make a change in recommendation with respect to the adoption of the merger agreement by the DigitalGlobe shareowners under certain circumstances, (c) the fact that DigitalGlobe would be permitted, under circumstances described in the merger agreement, to terminate the merger agreement in order to enter into an agreement with respect to a superior proposal after giving MDA the opportunity to match the superior proposal and upon payment of a termination fee equal to $85 million (approximately 3.6% of the equity value of DigitalGlobe), as further described in the section entitled “The Merger Agreement—Board Recommendation”, and (d) the advice of PJT Partners and Barclays that the approach pursued was likely to result in a premium price for DigitalGlobe;

 

    the allocation of regulatory risk between the parties under the merger agreement, including with respect to the level of efforts and undertakings required by the parties to obtain all necessary regulatory approvals, as well as the termination fee of $150 million payable by MDA to DigitalGlobe, subject to certain conditions, in the event the parties are not able to obtain all necessary regulatory approvals, as further described in the section entitled “The Merger Proposal—Regulatory Approvals Required for the Merger”;

 

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    (a) the financial analyses presented by PJT Partners and Barclays to the DigitalGlobe board of directors, (b) detailed discussions about the stock consideration, diligence performed by DigitalGlobe and its advisors with respect to MDA and reasonable expectations about the anticipated performance of the MDA common shares in anticipation of and following the closing of the merger, and (c) the opinions of each of PJT Partners and Barclays as to the fairness from a financial point of view of the merger consideration to be received by the holders of shares of DigitalGlobe common stock in the merger, as of the date of such opinions, as more fully described below in the sections entitled “The Merger ProposalOpinions of DigitalGlobes Financial Advisors—Opinion of PJT Partners and “The Merger Proposal—Opinions of DigitalGlobes Financial Advisors—Opinion of Barclays;

 

    the fact that the mixed equity and cash nature of the merger consideration offers DigitalGlobe’s shareowners the opportunity to participate in part with respect to the future earnings and growth of the combined company as well as requires that DigitalGlobe’s shareowners share in related risks of unfavorable performance of the combined company, while also providing DigitalGlobe’s shareowners with a substantial cash payout of $17.50 per share;

 

    the DigitalGlobe board of director’s belief that the merger will result in a combined company that is more broadly diversified and not substantially dependent on any one business line or customer, and with an enhanced earnings profile from sustainable synergies;

 

    the fact that the board of directors believes that MDA has the requisite financial wherewithal to (after giving effect to the financing contemplated by the debt commitment letter) consummate the transactions contemplated by the merger agreement and pay all related fees and expenses;

 

    risks associated with remaining an independent company, and possible alternative business strategies; and

 

    the availability of appraisal rights to DigitalGlobe shareowners in connection with the merger.

In connection with its deliberations relating to the merger, the DigitalGlobe board of directors also considered potential risks and negative factors concerning the merger and the other transactions contemplated by the merger agreement, including the following:

 

    the prospects and likelihood of realizing superior benefits through remaining an independent company;

 

    recognition that the merger agreement does not contain a floor for the value of MDA common shares and that the total value of the merger consideration payable in connection with the merger could rise or fall based on the changes in the trading value of the MDA common shares between the time of signing the merger agreement and the closing of the merger;

 

    the fact that both the stock consideration and the cash consideration will be taxable to DigitalGlobe’s shareowners;

 

    recognition that, while not anticipated, public announcement of the merger could negatively impact MDA’s financial performance, operating results and stock price and MDA’s relationship with customers, suppliers, other business partners, management and employees;

 

    recognition that, while not anticipated, public announcement of the merger could negatively impact DigitalGlobe’s financial performance, operating results and stock price and DigitalGlobe’s relationship with management, employees, customers, suppliers, and other business partners, including with respect to satellite constellation capital programs for new satellite builds and replacement capacity;

 

    regulatory approval requirements particular to MDA and DigitalGlobe, and risks associated with obtaining such approvals, including the potential that negative customer reaction, if any, to the proposed merger could unfavorably impact the outcome of seeking and obtaining the required regulatory approvals and that such customer reaction is not within DigitalGlobe’s control, as further described in the section entitled “The Merger Proposal—Regulatory Approvals Required for the Merger”;

 

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    risks and uncertainties introduced in any transaction in connection with any required antitrust laws as compared to the anticipated results of such filings in connection with the transactions contemplated by the merger agreement;

 

    the fact that DigitalGlobe will no longer exist as an independent public company and DigitalGlobe’s shareowners will forego any future increase in its value as an independent public company that might result from its possible growth (together with the possibility of near and long term fluctuations in the value of MDA common shares to be issued in connection with the merger);

 

    the fact that the merger agreement (a) precludes DigitalGlobe from actively soliciting competing acquisition proposals, as further discussed in the section entitled “The Merger Agreement—No Solicitation,” and (b) obligates DigitalGlobe (or its successor) to pay MDA a termination fee of up to $85 million under specified circumstances (and to reimburse MDA for expenses up to $10 million in certain other circumstances), which could discourage the making of a competing acquisition proposal or adversely impact the price offered in such a proposal, as further described in the section entitled “The Merger Agreement—Termination of the Merger Agreement”;

 

    the fact that the merger agreement imposes restrictions on the conduct of DigitalGlobe’s business in the pre-closing period, which may adversely affect DigitalGlobe’s business in the event the merger is not completed (including by delaying or preventing DigitalGlobe from pursuing business opportunities that may arise or precluding actions that would be advisable if DigitalGlobe were to remain an independent company);

 

    all known interests of directors and executive officers of DigitalGlobe in the merger that may be different from, or in addition to, their interests as DigitalGlobe shareowners or the interests of DigitalGlobe’s other shareowners generally;

 

    the risks involved with the merger and the likelihood that DigitalGlobe and MDA will be able to complete the merger or that MDA’s shareholders, whose favorable vote is required to permit MDA to consummate the merger, may not vote in favor of the merger, and the possibility that if the merger is not consummated for any reason, DigitalGlobe may encounter enhanced challenges in maintaining important relationships with its customers, suppliers, other business partners, management, employees and investors; and

 

    the substantial transaction expenses to be incurred in connection with the merger, including those that are payable by DigitalGlobe irrespective of whether the merger is consummated, and the negative impact of such expenses on DigitalGlobe’s cash reserves and operating results.

After considering the foregoing potentially negative and potentially positive factors, the DigitalGlobe board of directors concluded that the uncertainties, risks and potentially negative factors relevant to the merger were outweighed by the potential benefits that it expected DigitalGlobe and its shareowners would achieve as a result of the transaction.

The foregoing discussion of the information and factors considered by the DigitalGlobe board of directors, including the material positive and negative factors considered by the DigitalGlobe board of directors in consideration of the merger, is not exhaustive and may not include all of the factors considered by the DigitalGlobe board of directors. In view of the wide variety of factors considered in connection with its evaluation of the merger, and the complexity of these matters, the DigitalGlobe board of directors, both individually and collectively, did not quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the merger and the merger agreement and to make its recommendations to the DigitalGlobe shareowners. Rather, the DigitalGlobe board of directors based its recommendation on the totality of the information presented to it and the factors it considered. In addition, individual members of the DigitalGlobe board of directors may have given differing weights to different factors.

In considering the recommendation of the DigitalGlobe board of directors, you should be aware that directors and executive officers of DigitalGlobe have interests in the proposed merger that are in addition to, or

 

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different from, any interests they might have as shareowners. For more information, see the section entitled “The Merger Proposal—Interests of DigitalGlobes Directors and Executive Officers in the Merger.”

Opinions of DigitalGlobe’s Financial Advisors

Pursuant to separate engagement letters dated January 31, 2017 and February 8, 2017, respectively, DigitalGlobe engaged PJT Partners and Barclays, respectively, to act as financial advisor with respect to exploring strategic alternatives for DigitalGlobe, including the merger.

Opinion of PJT Partners

On February 23, 2017, PJT Partners rendered its oral opinion (which was subsequently confirmed in writing) to the DigitalGlobe board of directors that, as of such date and based upon and subject to the qualifications, limitations and assumptions stated in its opinion, the merger consideration to be received in the merger by the holders of DigitalGlobe common stock (other than DigitalGlobe, its subsidiaries, MDA and its affiliates) was fair from a financial point of view to the holders of DigitalGlobe common stock.

The full text of PJT Partners’ written opinion, dated as of February 23, 2017, is attached as Annex B to this proxy statement/prospectus. PJT Partners’ written opinion sets forth, among other things, the assumptions made, procedures followed, factors considered and limitations upon the review undertaken by PJT Partners in rendering its opinion. You are encouraged to read the opinion carefully in its entirety. The following is a summary of PJT Partners’ opinion and the methodology that PJT Partners used to render its opinion. This summary is qualified in its entirety by reference to the full text of the opinion.

In arriving at its opinion, PJT Partners, among other things:

 

    reviewed certain publicly available information concerning the businesses, financial conditions and operations of DigitalGlobe and MDA;

 

    reviewed certain internal information concerning the business, financial condition and operations of DigitalGlobe prepared and furnished to us by the management of DigitalGlobe;

 

    reviewed certain internal financial analyses, estimates and forecasts relating to DigitalGlobe, including the Scenario 1 projections, the Scenario 2 projections and the Scenario 3 projections;

 

    reviewed certain financial analyses, estimates and forecasts relating to MDA, including the DigitalGlobe Revised MDA Forecasts;

 

    reviewed the expectations of management of DigitalGlobe with respect to the pro forma impact of the merger on the future financial performance of the combined company, including the Synergy Projections, and other strategic benefits expected by the management of DigitalGlobe to result from the merger;

 

    reviewed the projections estimating the net operating losses of DigitalGlobe for fiscal year 2017 through fiscal year 2021 included in the Scenario 1 projections, the Scenario 2 projections and the Scenario 3 projections;

 

    held discussions with members of senior management of DigitalGlobe concerning, among other things, their evaluation of the merger and DigitalGlobe’s and MDA’s businesses, operating and regulatory environments, financial conditions, prospects and strategic objectives;

 

    held discussions with members of senior management of MDA concerning, among other things, their evaluation of MDA’s business, operating and regulatory environment, financial condition, prospects and strategic objectives;

 

    reviewed the historical market prices and trading activity for the DigitalGlobe common stock and MDA common shares;

 

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    compared certain publicly available financial and stock market data for DigitalGlobe and MDA with similar information for certain other companies that PJT Partners deemed to be relevant;

 

    reviewed a draft, dated February 23, 2017, of the merger agreement; and

 

    performed such other financial studies, analyses and investigations, and considered such other matters, as PJT Partners deemed necessary or appropriate for purposes of rendering its opinion.

In preparing its opinion, with the consent of DigitalGlobe, PJT Partners relied upon and assumed the accuracy and completeness of the foregoing information and all other information discussed with or reviewed by it, without independent verification thereof. PJT Partners assumed, with DigitalGlobe’s consent, that the Scenario 1 projections, Scenario 2 projections and the Scenario 3 projections were reasonably prepared in accordance with industry practice and represented, as of the date of PJT Partners’ opinion, the best estimates and judgments of management of DigitalGlobe (subject, in each case, to the assumptions set forth therein) as to the business and operations and future financial performance of DigitalGlobe. PJT Partners assumed, with DigitalGlobe’s consent, that the DigitalGlobe Revised MDA Forecasts were reasonably prepared in accordance with industry practice and represented, as of the date of PJT Partners’ opinion, the best estimates and judgments of management of DigitalGlobe (subject to the assumptions set forth therein) as to the business and operations and future financial performance of MDA. PJT Partners assumed, with DigitalGlobe’s consent, that the amounts of the net operating losses included in the Scenario 1 projections, the Scenario 2 projections and the Scenario 3 projections were reasonable and that such net operating losses would be realized in accordance with such estimates. PJT Partners assumed, with DigitalGlobe’s consent, that the amounts and timing of the Synergy Projections were reasonable and that the Synergy Projections would be realized in accordance with such estimates. With DigitalGlobe’s consent, PJT Partners assumes no responsibility for and expressed no opinion as to the Scenario 1 projections, the Scenario 2 projections, the Scenario 3 projections, the DigitalGlobe Revised MDA Forecasts, the net operating loss projections included in the Scenario 1 projections, the Scenario 2 projections and the Scenario 3 projections, the Standalone NOL Projections, the Synergy Projections, the assumptions upon which any of the foregoing are based or any other financial analyses, estimates and forecasts provided to PJT Partners by management of DigitalGlobe. With DigitalGlobe’s consent, PJT Partners assumed that there were no material changes in the assets, financial conditions, results of operations, businesses or prospects of DigitalGlobe or MDA since the respective dates of the last financial statements made available to PJT Partners prior to the date of its opinion, other than as reflected in the Scenario 1 projections, the Scenario 2 projections, the Scenario 3 projections or the DigitalGlobe Revised MDA Forecasts. PJT Partners further relied, with DigitalGlobe’s consent, upon the assurances of management of DigitalGlobe that they were not aware of any facts that would make the information and projections provided by them inaccurate, incomplete or misleading in any material respect.

PJT Partners also assumed, with DigitalGlobe’s consent, that the final executed form of the merger agreement would not differ in any material respect from the draft reviewed by it and that the consummation of the merger would be effected in accordance with the terms and conditions of the merger agreement, without any material waiver, modification or amendment of any term, condition or agreement, and that, in the course of obtaining the necessary regulatory or third party consents and approvals (contractual or otherwise) for the merger, no delay, limitation, restriction or condition would be imposed that would have a material effect on the combined company or the contemplated benefits of the merger. PJT Partners did not express any opinion as to any tax or other consequences that might result from the merger, nor does its opinion address any legal, tax, regulatory or accounting matters, as to which PJT Partners understood that DigitalGlobe obtained such advice as it deemed necessary from qualified professionals. PJT Partners are not legal, tax or regulatory advisors and, with DigitalGlobe’s consent, relied upon without independent verification the assessment of DigitalGlobe and its legal, tax and regulatory advisors with respect to such matters.

PJT Partners was not asked to undertake, and did not undertake, an independent verification of any information provided to or reviewed by it, nor was it furnished with any such verification, and it did not assume any responsibility or liability for the accuracy or completeness thereof. PJT Partners did not make a physical inspection of any of the properties or assets of DigitalGlobe or MDA. PJT Partners did not make an independent

 

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evaluation or appraisal of the assets or the liabilities (contingent or otherwise) of DigitalGlobe or MDA, nor was it furnished with any such evaluations or appraisals, nor did it undertake an evaluation of the solvency of DigitalGlobe or MDA under any applicable laws.

PJT Partners did not consider the relative merits of the merger as compared to any other business plan or opportunity that might be available to DigitalGlobe or the effect of any other arrangement in which DigitalGlobe might engage, and PJT Partners’ opinion does not address the underlying decision byDigitalGlobe to engage in the merger. PJT Partners’ opinion is limited to the fairness as of the date thereof, from a financial point of view, to the holders of DigitalGlobe common stock (other than DigitalGlobe, its subsidiaries, MDA and its affiliates) of the merger consideration to be received by such holders in the merger, and PJT Partners’ opinion does not address any other aspect or implication of the merger, the merger agreement, or any other agreement or understanding entered into in connection with the merger or otherwise. PJT Partners further expressed no opinion or view as to the fairness of the merger to the holders of any other class of securities, creditors or other constituencies of DigitalGlobe or as to the underlying decision by DigitalGlobe to engage in the merger. PJT Partners also expressed no opinion as to the fairness of the amount or nature of the compensation to any of DigitalGlobe’s officers, directors or employees, or any class of such persons, relative to the merger consideration or otherwise. PJT Partners’ opinion is necessarily based upon economic, market, monetary, regulatory and other conditions as they existed and could be evaluated, and the information made available to PJT Partners, as of the date thereof.

PJT Partners expressed no opinion as to the prices or trading ranges at which shares of DigitalGlobe common stock or MDA common shares will trade at any time, regardless of exchange listing or listings. PJT Partners’ opinion does not constitute a recommendation to any DigitalGlobe shareowner as to how such DigitalGlobe shareowner should vote or act with respect to the merger or any other matter. PJT Partners assumed no responsibility for updating or revising its opinion based on circumstances or events occurring after the date thereof. PJT Partners’ opinion was approved by a fairness committee of PJT Partners in accordance with established procedures.

PJT Partners’ opinion was provided to the DigitalGlobe board of directors, in its capacity as such, in connection with and for the purposes of its evaluation of the merger only and is not a recommendation as to any action the DigitalGlobe board of directors should take with respect to the merger or any aspect thereof.

In connection with rendering its opinion, PJT Partners performed certain financial, comparative and other analyses as summarized below. In arriving at its opinion, PJT Partners did not ascribe a specific range of values to the shares of DigitalGlobe common stock but rather made its determination as to fairness, from a financial point of view, to the holders of DigitalGlobe common stock (other than DigitalGlobe, its subsidiaries, MDA and its affiliates) of the merger consideration to be offered to such holders in the merger on the basis of various financial and comparative analyses. The preparation of a fairness opinion is a complex process and involves various determinations as to the most appropriate and relevant methods of financial and comparative analyses and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to summary description.

In arriving at its opinion, PJT Partners did not attribute any particular weight to any single analysis or factor considered by it but rather made qualitative judgments as to the significance and relevance of each analysis and factor relative to all other analyses and factors performed and considered by it and in the context of the circumstances of the merger. Accordingly, PJT Partners believes that its analyses must be considered as a whole, as considering any portion of such analyses and factors, without considering all analyses and factors as a whole, could create a misleading or incomplete view of the process underlying its opinion.

The following is a summary of the material financial analyses used by PJT Partners in preparing its opinion to the DigitalGlobe board of directors. Certain financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses used by PJT Partners, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analyses. In performing its analyses, PJT Partners made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond

 

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the control of DigitalGlobe or any other parties to the merger. None of DigitalGlobe, MDA, Merger Sub, PJT Partners, Barclays or any other person assumes responsibility if future results are materially different from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below. In addition, analyses relating to the value of the businesses do not purport to be appraisals or reflect the prices at which the businesses may actually be sold.

Historical Trading Multiples

PJT Partners reviewed and compared various implied financial multiples and ratios of DigitalGlobe since DigitalGlobe’s initial public offering in May 2009. As part of this analysis, PJT Partners calculated and analyzed DigitalGlobe’s total enterprise value (calculated as the equity value based on fully diluted shares outstanding calculated using the treasury stock method, plus debt and less cash) as a multiple of certain historical financial criteria (such as earnings before interest, taxes, depreciation and amortization and post-stock based compensation for the next twelve month period for which financial information is not available, or NTM EBITDA (post-stock based compensation)). All of these calculations were performed and based on publicly available financial data (including historical Wall Street NTM EBITDA (post-stock based compensation) consensus estimates) and closing prices through February 16, 2017. The results of this historical trading multiples analysis are summarized below:

 

Date range    Total enterprise value /
NTM EBITDA (post-stock
based compensation)
 

6-month

     7.6x  

1-year

     7.2x  

Since IPO

     7.7x  

Based upon the foregoing analysis and its professional judgment, PJT Partners selected a range of 6.5x to 8.5x for 2017E EBITDA (post-stock based compensation) for DigitalGlobe and applied such range to the Scenario 1 projections, Scenario 2 projections and Scenario 3 projections to calculate a range of implied prices per share of DigitalGlobe common stock based on the fully diluted number of shares of DigitalGlobe common stock as of February 16, 2017. The following summarizes the results of these calculations, as compared to the merger consideration:

 

Implied prices per share of

DigitalGlobe common stock

   Merger consideration(1)  

$20-$31

   $ 35.00  

 

(1) The implied value of the merger consideration used for purposes of PJT Partners’ financial analyses was determined by DigitalGlobe and MDA based on the closing price of MDA common shares on the TSX on February 16, 2017 (converted to U.S. dollars using a CAD/USD exchange rate of 0.7612).

PJT Partners noted that on the basis of the historical trading multiples analysis, the value of the merger consideration was above the range of implied value per share.

Selected Comparable Company Analysis—DigitalGlobe

In order to assess how the public market values shares of similar publicly traded companies, PJT Partners reviewed and compared specific financial and operating data relating to DigitalGlobe with selected companies that PJT Partners deemed comparable to DigitalGlobe. The selected comparable companies were Airbus Group SE, Eutelstat Communications SA, Inmarsat Plc, Intelsat SA, Orbital ATK Inc., SES SA and Thales SA.

 

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PJT Partners calculated and compared various implied financial multiples and ratios of DigitalGlobe and the selected comparable companies. As part of its selected comparable company analysis, PJT Partners calculated and analyzed the following ratios and multiples: (1) total enterprise value (calculated as the equity value based on fully diluted shares outstanding calculated using the treasury stock method, plus debt, tax-effected unfunded pension liability and the value of any minority interests, and less cash), as a multiple of 2017E EBITDA (post-stock based compensation and adjusted for pension expense) and (2) total enterprise value (calculated as the equity value based on fully diluted shares outstanding calculated using the treasury stock method, plus debt and the value of any minority interests, and less cash) as a multiple of 2017E EBITDA (post-stock based compensation). All of these calculations were performed and based on publicly available financial data (including Wall Street 2017E EBITDA (post-stock based compensation) consensus estimates) and closing prices as of February 16, 2017. The results of this selected comparable company analysis are summarized below:

 

Company   

Total enterprise value /

2017E EBITDA(post-
stock based
compensation)(1)

     Total enterprise value /
2017E EBITDA (post-
stock based
compensation)(2)
 

Mean

     8.4x        8.0x  

Median

     8.2x        8.2x  

DigitalGlobe (market price as of February 16, 2017)

     8.1x        8.1x  

DigitalGlobe (value of merger consideration)

     9.0x        9.0x  

 

(1) Total enterprise value includes tax-effected unfunded pension liability. EBITDA is adjusted for pension expense.
(2) Total enterprise value does not include tax-effected unfunded pension liability. EBITDA is not adjusted for pension expense.

PJT Partners selected the comparable companies listed above because PJT Partners believed their businesses and operating profiles are reasonably similar to that of DigitalGlobe. However, because of the inherent differences between the business, operations and prospects of DigitalGlobe and those of the selected comparable companies, PJT Partners believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the selected comparable company analysis. Accordingly, PJT Partners also made qualitative judgments concerning differences between the business, financial and operating characteristics and prospects of DigitalGlobe and the selected comparable companies that could affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis. These qualitative judgments related primarily to the differing sizes, growth prospects, profitability levels and degree of operational risk between DigitalGlobe and the companies included in the selected company analysis. Based upon these judgments, PJT Partners selected a range of 7.0x to 9.0x for 2017E EBITDA (post-stock based compensation) for DigitalGlobe and applied such range to the Scenario 1 projections, the Scenario 2 projections and the Scenario 3 projections to calculate a range of implied prices per share of DigitalGlobe common stock based on the fully diluted number of shares of DigitalGlobe common stock as of February 16, 2017. The following summarizes the results of these calculations, as compared to the merger consideration:

 

Implied prices per share of

DigitalGlobe common stock

   Merger consideration  

$23-$34

   $ 35.00  

PJT Partners noted that on the basis of the selected comparable company analysis, the value of the merger consideration was above the range of implied value per share.

Selected Comparable Company Analysis—MDA

In order to assess how the public market values shares of similar publicly traded companies, PJT Partners reviewed and compared specific financial and operating data relating to MDA with selected companies that PJT

 

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Partners deemed comparable to MDA. The selected comparable companies were Airbus Group SE, Boeing Co., Harris Corporation, L3 Technologies Inc., Lockheed Martin Corporation, Northrop Grumman Corporation, Orbital ATK Inc., Raytheon Company and Thales SA.

PJT Partners calculated and compared various implied financial multiples and ratios of MDA and the selected comparable companies. As part of its selected comparable company analysis, PJT Partners calculated and analyzed the following ratios and multiples: (1) total enterprise value (calculated as the equity value based on fully diluted shares outstanding calculated using the treasury stock method, plus debt, tax-effected unfunded pension liability and the value of any minority interests, and less cash), as a multiple of 2017E EBITDA (post-stock based compensation and adjusted for pension expense) and (2) total enterprise value (calculated as the equity value based on fully diluted shares outstanding calculated using the treasury stock method, plus debt and the value of any minority interests, and less cash) as a multiple of 2017E EBITDA (post-stock based compensation). All of these calculations were performed and based on publicly available financial data (including Wall Street 2017E EBITDA (post-stock based compensation) estimates) and closing prices as of February 16, 2017. The results of this selected comparable company analysis are summarized below:

 

Company    Total enterprise value /
2017E EBITDA (post-
stock based
compensation)(1)
     Total enterprise value /
2017E EBITDA (post-
stock based
compensation)(2)
 

Mean

     11.5x        10.9x  

Median

     11.8x        11.4x  

MDA (Operating EBITDA)

     10.4x        9.6x  

MDA (Corporate EBITDA)

     11.0x        10.2x  

 

(1) Total enterprise value includes tax-effected unfunded pension liability. EBITDA is adjusted for pension expense.
(2) Total enterprise value does not include tax-effected unfunded pension liability. EBITDA is not adjusted for pension expense.

PJT Partners selected the comparable companies listed above because PJT Partners believed their businesses and operating profiles are reasonably similar to that of MDA. However, because of the inherent differences between the business, operations and prospects of MDA and those of the selected comparable companies, PJT Partners believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the selected comparable company analysis. Accordingly, PJT Partners also made qualitative judgments concerning differences between the business, financial and operating characteristics and prospects of MDA and the selected comparable companies that could affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis. These qualitative judgments related primarily to the differing sizes, growth prospects, profitability levels and degree of operational risk between MDA and the companies included in the selected company analysis. Based upon these judgments, PJT Partners selected a range of 9.5x to 12.5x for 2017E EBITDA (post-stock based compensation) for MDA and applied such ranges to the DigitalGlobe Revised MDA Forecasts to calculate ranges of implied prices per MDA common share based on the fully diluted number of MDA common shares as of February 16, 2017. The following summarizes the results of these calculations, as compared to the closing price per MDA common share as of February 16, 2017:

 

Implied prices per MDA

common share

   Price per MDA
common share(1)
 

$44-64

   $ 56.23  

 

(1)  Calculated using a CAD/USD exchange rate of 0.766, as reported by S&P CapitalIQ on February 16, 2017.

PJT Partners noted that on the basis of the selected comparable company analysis, the closing price per MDA common share as of February 16, 2017 was within the range of implied value per share.

 

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Discounted Cash Flow Analysis—DigitalGlobe

In order to estimate the present value of DigitalGlobe common stock, PJT Partners performed a discounted cash flow analysis of DigitalGlobe. A discounted cash flow analysis is a traditional valuation methodology used to derive a valuation of an asset by calculating the “present value” of estimated future cash flows generated by the asset. “Present value” refers to the current value of future cash flows or amounts and is obtained by discounting those future cash flows or amounts by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors.

To calculate the estimated enterprise value of DigitalGlobe using the discounted cash flow method, PJT Partners added (a) DigitalGlobe’s projected after-tax unlevered free cash flows for fiscal years 2017E through 2021E based on the Scenario 1 projections, the Scenario 2 projections and the Scenario 3 projections (adjusted to exclude the effect of DigitalGlobe’s interest on taxes paid) to (b) ranges of “terminal values” of DigitalGlobe as of December 31, 2021, and discounted such amount to its present value using a range of selected discount rates. The after-tax unlevered free cash flows were calculated by taking earnings before interest, tax expense, depreciation and amortization (excluding amortization of purchased intangibles) and post-stock based compensation, subtracting taxes (calculated assuming a net operating loss balance of $225 million as of December 31, 2016 and assuming levered net operating loss usage as set forth in the net operating loss projections included in the Scenario 1 projections, the Scenario 2 projections and the Scenario 3 projections, as applicable), capital expenditures, deferred revenue, deferred contract costs and other operating activities, and adjusting for changes in working capital. The residual value of DigitalGlobe at the end of the forecast period, or “terminal value,” was estimated by applying perpetuity growth rates of 1.5% to 2.5% to the Scenario 1 projections, the Scenario 2 projections and the Scenario 3 projections. The range of discount rates of 7.75% to 8.75% was selected based on an analysis of the estimated weighted average cost of capital of DigitalGlobe. PJT Partners then calculated a range of implied prices per share of DigitalGlobe common stock by subtracting estimated net debt as of December 31, 2016 from the estimated enterprise value derived using the discounted cash flow method and dividing such amount by the fully diluted number of shares of DigitalGlobe common stock as of February 16, 2017. The following summarizes the results of these calculations as compared to the merger consideration:

 

Projections    Implied prices per share of
DigitalGlobe common stock
     Merger consideration  

Scenario 1 projections

   $ 25-$40      $ 35.00  

Scenario 2 projections

   $ 20-$32      $ 35.00  

Scenario 3 projections

   $ 29-$45      $ 35.00  

PJT Partners noted that on the basis of the discounted cash flow analysis, the value of the merger consideration was within the ranges of implied values per share calculated using the Scenario 1 projections and the Scenario 3 projections and above the range of implied values per share calculated using the Scenario 2 projections.

Discounted Cash Flow Analysis—MDA

In order to estimate the present value of MDA common shares, PJT Partners also performed a discounted cash flow analysis of MDA.

To calculate the estimated enterprise value of MDA using the discounted cash flow method, PJT Partners added (a) MDA’s projected after-tax unlevered free cash flows for fiscal years 2017E through 2021E based on the DigitalGlobe Revised MDA Forecasts to (adjusted to exclude the effect of MDA’s interest on taxes paid) (b) ranges of “terminal values” of MDA as of December 31, 2021, and discounted such amount to its present value using a range of selected discount rates. The after-tax unlevered free cash flows were calculated by taking earnings before interest, tax expense, depreciation and amortization (excluding amortization of purchased intangibles) and post-stock based compensation, subtracting taxes, capital expenditures, enterprise improvement

 

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costs, foreign exchange loss, executive termination settlement costs and income tax expenses, and adjusting for changes in working capital. The residual value of MDA at the end of the forecast period, or “terminal value,” was estimated by selecting a range of terminal values multiples based on 2021E EBITDA (post-stock based compensation) of 9.5x to 12.5x, which was derived by analyzing the results from the selected comparable company analysis, and applying such range to the DigitalGlobe Revised MDA Forecasts. The range of discount rates of 7.5% to 8.5% was selected based on an analysis of the estimated weighted average cost of capital of MDA. PJT Partners then calculated a range of implied prices per MDA common share by subtracting estimated net debt (including the after-tax unfunded pension liability) as of December 31, 2016 from the estimated enterprise value derived using the discounted cash flow method and dividing such amount by the fully diluted number of MDA common shares as of February 16, 2017. The following summarizes the results of these calculations, as compared to the closing price per MDA common share as of February 16, 2017:

 

Implied prices per MDA
common share
   Price per MDA
common share(1)
 

$42-$62

   $ 56.23  

 

(1)  Calculated using a CAD/USD exchange rate of 0.766, as reported by S&P CapitalIQ on February 16, 2017.

PJT Partners noted that on the basis of the discounted cash flow analysis, the closing price per MDA common share as of February 16, 2017 was within the range of implied values per share calculated using the DigitalGlobe Revised MDA Forecasts.

Discounted Equity Value Analysis—DigitalGlobe

PJT Partners performed a discounted equity value analysis of DigitalGlobe on a stand-alone basis to estimate the present value of DigitalGlobe common stock. The discounted equity value of DigitalGlobe was estimated by selecting a range of multiples for 2020E NTM EBITDA (post-stock based compensation) of 6.5x to 8.5x, which was derived by analyzing the results from the historical trading multiples analysis and selected comparable company analysis, applying such range to the Scenario 1 projections, the Scenario 2 projections and the Scenario 3 projections, and subtracting estimated net debt as of December 31, 2020 (which was calculated assuming 50% of DigitalGlobe’s excess cash flow is used to repay debt). PJT Partners then calculated an estimated future equity value per share of DigitalGlobe common stock on December 31, 2020 by taking such implied equity values and dividing such amounts by the fully diluted number of shares of DigitalGlobe common stock estimated to be outstanding as of December 31, 2020 (which was calculated assuming 50% of DigitalGlobe’s excess cash flow is used to repurchase shares of DigitalGlobe common stock at a constant multiple of 6.5x to 8.5x of NTM EBITDA (post-stock based compensation)). PJT Partners then discounted these ranges of future equity values per share by a discount rate of 11% based on DigitalGlobe’s estimated cost of equity. The following summarizes the results of these calculations, as compared to the merger consideration:

 

Projections    Implied prices per share of
DigitalGlobe common stock
     Merger consideration  

Scenario 1 projections

   $ 25-$34      $ 35.00  

Scenario 2 projections

   $ 21-$29      $ 35.00  

Scenario 3 projections

   $ 28-$38      $ 35.00  

PJT Partners noted that on the basis of the discounted equity value analysis, the value of the merger consideration was within the range of implied values per share calculated using the Scenario 3 projections and above the ranges of implied values per share calculated using the Scenario 1 projections and the Scenario 2 projections.

Discounted Equity Value Analysis—MDA

PJT Partners performed a discounted equity value analysis of MDA on a stand-alone basis to estimate the present value of MDA common shares. The discounted equity value of MDA was estimated by selecting a range

 

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of multiples for 2020E NTM EBITDA (post-stock based compensation) of 9.5x to 12.5x, which was derived by analyzing the results from the selected comparable company analysis, applying such range to the DigitalGlobe Revised MDA Forecasts, and subtracting estimated net debt (including the after-tax unfunded pension liability) as of December 31, 2020 (which was calculated assuming 50% of MDA’s excess cash flow is used to repay debt). PJT Partners then calculated an estimated future equity value per MDA common share on December 31, 2020 by taking such implied equity values and dividing such amounts by the fully diluted number of MDA common shares estimated to be outstanding as of December 31, 2020 (which was calculated assuming 50% of MDA’s excess cash flow is used to repurchase MDA common shares at a constant multiple of 9.5x to 12.5x of NTM EBITDA (post-stock based compensation)). PJT Partners then discounted these ranges of future equity values per share by a discount rate of 8.75% based on MDA’s estimated cost of equity. The following summarizes the results of these calculations, as compared to the closing price per MDA common share as of February 16, 2017:

 

Implied prices per MDA

common share

   Price per MDA
common share(1)
 

$49-$64

   $ 56.23  

 

(1)  Calculated using a CAD/USD exchange rate of 0.766, as reported by S&P CapitalIQ on February 16, 2017.

PJT Partners noted that on the basis of the discounted equity value analysis, the closing price per MDA common share as of February 16, 2017 was within the range of implied values per share calculated using the DigitalGlobe Revised MDA Forecasts.

Implied Stock-for-Stock Exchange Ratios

PJT Partners also performed the following analyses to derive ranges of implied stock-for-stock exchange ratios of MDA common share per share of DigitalGlobe common stock for the stock component of the merger consideration:

 

    Relative Historical Trading Multiples Analysis. PJT Partners performed an analysis in which PJT Partners derived a range of implied stock-for-stock exchange ratios of MDA common shares per share of DigitalGlobe common stock for the stock component of the merger consideration by (a) dividing the difference between the low end of the implied prices per share of DigitalGlobe common stock derived from the historical trading multiples analysis discussed above and the cash component of the merger consideration by the low end of the implied prices per MDA common share derived from the selected comparable company analysis discussed above and (b) dividing the difference between the high end of the implied prices per share of DigitalGlobe common stock derived from the historical trading multiples analysis discussed above and the cash component of the merger consideration by the high end of the implied prices per MDA common share derived from the selected comparable company analysis discussed above. Based on this analysis, PJT Partners calculated a range of implied exchange ratios of 0.057x to 0.217x, as compared to the exchange ratio of 0.311x implied by the stock component of the merger consideration and the closing price of an MDA common share as of February 16, 2017 of $56.23 (converted to USD using a CAD/USD exchange rate of 0.766, as reported by S&P CapitalIQ on February 16, 2017). The actual exchange ratio for the stock component of the merger consideration is 0.3132x.

 

   

Relative Selected Comparable Company Analysis. PJT Partners performed an analysis in which PJT Partners derived a range of implied stock-for-stock exchange ratios of MDA common shares per share of DigitalGlobe common stock for the stock component of the merger consideration by (a) dividing the difference between the low end of the implied prices per share of DigitalGlobe common stock derived from the selected comparable company analysis discussed above and the cash component of the merger consideration by the low end of the implied prices per MDA common share derived from the selected comparable company analysis discussed above and (b) dividing the difference between the high end of the implied prices per share of DigitalGlobe common stock derived from the selected comparable

 

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company analyses discussed above and the cash component of the merger consideration by the high end of the implied prices per MDA common share derived from the selected comparable company analysis discussed above. Based on this analysis, PJT Partners calculated a range of implied exchange ratios of 0.122x to 0.261x, as compared to the exchange ratio of 0.311x implied by the stock component of the merger consideration and the closing price of an MDA common share as of February 16, 2017 of $56.23 (converted to USD using a CAD/USD exchange rate of 0.766, as reported by S&P CapitalIQ on February 16, 2017). The actual exchange ratio for the stock component of the merger consideration is 0.3132x.

 

    Relative Discounted Cash Flow Analysis. PJT Partners performed an analysis in which PJT Partners derived ranges of implied stock-for-stock exchange ratios of MDA common shares per share of DigitalGlobe common stock for the stock component of the merger consideration by, for each of the Scenario 1 projections, the Scenario 2 projections and the Scenario 3 projections, (a) dividing the difference between the low end of the implied prices per share of DigitalGlobe common stock derived from the discounted cash flow analysis discussed above and the cash component of the merger consideration by the low end of the implied prices per MDA common share derived from the discounted cash flow analysis discussed above and (b) dividing the difference between the high end of the implied prices per share of DigitalGlobe common stock derived from the discounted cash flow analysis discussed above and the cash component of the merger consideration by the high end of the implied prices per MDA common share derived from the discounted cash flow analysis discussed above. Based on this analysis, PJT Partners calculated ranges of implied exchange ratios of 0.184x to 0.358x based on the Scenario 1 projections, 0.056x to 0.242x based on the Scenario 2 projections, and 0.275x to 0.446x based on the Scenario 3 projections, in each case as compared to the exchange ratio of 0.311x implied by the stock component of the merger consideration and the closing price of an MDA common share as of February 16, 2017 of $56.23 (converted to USD using a CAD/USD exchange rate of 0.766, as reported by S&P CapitalIQ on February 16, 2017). The actual exchange ratio for the stock component of the merger consideration is 0.3132x.

 

    Relative Discounted Equity Value Analysis. PJT Partners performed an analysis in which PJT Partners derived ranges of implied stock-for-stock exchange ratios of MDA common shares per share of DigitalGlobe common stock for the stock component of the merger consideration by, for each of the Scenario 1 projections, the Scenario 2 projections and the Scenario 3 projections, (a) dividing the difference between the low end of the implied prices per share of DigitalGlobe common stock derived from the discounted equity value analysis discussed above and the cash component of the merger consideration by the low end of the implied prices per MDA common share derived from the discounted equity value analysis discussed above and (b) dividing the difference between the high end of the implied prices per share of DigitalGlobe common stock derived from the discounted equity value analysis discussed above and the cash component of the merger consideration by the high end of the implied prices per MDA common share derived from the discounted equity value analysis discussed above. Based on this analysis, PJT Partners calculated ranges of implied exchange ratios of 0.157x to 0.264x based on the Scenario 1 projections, 0.074x to 0.185x based on the Scenario 2 projections and 0.215x to 0.320x based on the Scenario 3 projections, in each case as compared to the exchange ratio of 0.311x implied by the stock component of the merger consideration and the closing price of an MDA common share as of February 16, 2017 of $56.23 (converted to USD using a CAD/USD exchange rate of 0.766, as reported by S&P CapitalIQ on February 16, 2017). The actual exchange ratio for the stock component of the merger consideration is 0.3132x.

Other Information

PJT Partners also observed the below factors, which were not considered part of its financial analyses in connection with rendering its opinion, but were referenced solely for informational purposes:

 

   

leveraged buyout analyses of DigitalGlobe (assuming an equity investment that would achieve a minimum rate of return of 17.5% to 22.5% during a five-year period, a projected NTM EBITDA exit

 

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multiple of 6.5x to 8.5x and leverage of 6.0x LTM EBITDA) using the Scenario 1 projections, the Scenario 2 projections and the Scenario 3 projections, which indicated ranges of implied values per share of $25 to $34 in the case of the Scenario 1 projections, $22 to $29 in the case of the Scenario 2 projections and $27 to $36 in the case of the Scenario 3 projections, in each case as compared to the merger consideration of $35.00;

 

    historical trading prices of a share of DigitalGlobe common stock and an MDA common share during the 52-week period ending February 16, 2017, which indicated (a) low and high closing prices of a share of DigitalGlobe common stock during such period of $13 to $33, as compared to the merger consideration of $35.00, (b) low and high closing prices of an MDA common share during such period of $49 to $71, as compared to the closing price of an MDA common share as of February 16, 2017 of $56.23 (converted to USD using a CAD/USD exchange rate of 0.766, as reported by S&P CapitalIQ on February 16, 2017) and (c) ranges of implied exchange ratios for the stock component of the merger consideration of -0.050x to 0.295x, as compared to the exchange ratio of 0.311x implied by the stock component of the merger consideration and the closing price of an MDA common share as of February 16, 2017 of $56.23 (converted to USD using a CAD/USD exchange rate of 0.766, as reported by S&P CapitalIQ on February 16, 2017) (the actual exchange ratio for the stock component of the merger consideration is 0.3132x); and

 

    publicly available Wall Street research analysts’ share price targets in the next twelve months for each of a share of DigitalGlobe common stock and an MDA common share, which indicated (a) a target share price range for a share of DigitalGlobe common stock of $22 to $40 (reflecting the discounting of such price targets using an assumed cost of equity of 11.0%), as compared to the merger consideration of $35.00, (b) a target share price range for an MDA common share of $53 to $67 (reflecting the discounting of such price targets using an assumed cost of equity of 8.75%), as compared to the closing price of an MDA common share as of February 16, 2017 of $56.23 (converted to USD using a CAD/USD exchange rate of 0.766, as reported by S&P CapitalIQ on February 16, 2017) and (c) ranges of implied exchange ratios for the stock component of the merger consideration of 0.078x to 0.331x, as compared to the exchange ratio of 0.311x implied by the stock component of the merger consideration and the closing price of an MDA common share as of February 16, 2017 of $56.23 (converted to USD using a CAD/USD exchange rate of 0.766, as reported by S&P CapitalIQ on February 16, 2017) (the actual exchange ratio for the stock component of the merger consideration is 0.3132x).

General

PJT Partners is an internationally recognized investment banking firm and, as part of its investment banking activities, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. The DigitalGlobe board of directors selected PJT Partners because of its qualifications, reputation and experience in the valuation of businesses and securities in connection with mergers and acquisitions generally and in the technology, media and telecommunications sector specifically.

PJT Partners is acting as financial advisor to DigitalGlobe in connection with the merger. As compensation for its services in connection with the merger, DigitalGlobe paid PJT Partners (a) $1 million upon the delivery of PJT Partners’ opinion and (b) $4 million upon execution of the merger agreement. Estimated compensation of approximately $36 million (estimated based on DigitalGlobe’s debt, cash and fully diluted shares outstanding calculated using the treasury stock method as of February 16, 2017 and the announced merger consideration of $35.00) will be payable at the closing of the merger, against which the amounts previously paid relating to the opinion and execution of the merger agreement will be credited. For the avoidance of doubt, the actual compensation payable will not be finally determined until the closing of the merger. In addition, DigitalGlobe has agreed to reimburse PJT Partners for its out-of-pocket expenses incurred in connection with the merger and to indemnify PJT Partners for certain liabilities that may arise out of its engagement by DigitalGlobe and the

 

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rendering of PJT Partners’ opinion. In the ordinary course of its and its affiliates’ businesses, PJT Partners and its affiliates may provide investment banking and other financial services to DigitalGlobe, MDA and their respective affiliates and may receive compensation for the rendering of these services. Specifically, since its formation on October 1, 2015, PJT Partners advised DigitalGlobe in connection with a possible acquisition that was ultimately not consummated. PJT Partners did not receive any compensation, and no engagement letter was executed, in connection with such transaction.

Opinion of Barclays

On February 23, 2017, Barclays rendered its oral opinion (which was subsequently confirmed in writing) to the DigitalGlobe board of directors that, as of such date and based upon and subject to the qualifications, limitations and assumptions stated in its opinion, from a financial point of view, the merger consideration to be offered to the holders of DigitalGlobe common stock (other than DigitalGlobe, its subsidiaries, MDA and its affiliates) was fair to such holders.

The full text of Barclays’ written opinion, dated as of February 23, 2017, is attached as Annex C to this proxy statement/prospectus. Barclays’ written opinion sets forth, among other things, the assumptions made, procedures followed, factors considered and limitations upon the review undertaken by Barclays in rendering its opinion. You are encouraged to read the opinion carefully in its entirety. The following is a summary of Barclays’ opinion and the methodology that Barclays used to render its opinion. This summary is qualified in its entirety by reference to the full text of the opinion.

Barclays’ opinion, the issuance of which was approved by Barclays’ Valuation and Fairness Opinion Committee, was for the use and benefit of, and was rendered to, the DigitalGlobe board of directors in connection with its consideration of the merger, addresses only the fairness, from a financial point of view, of the merger consideration to be offered to the holders of DigitalGlobe common stock and does not constitute a recommendation to any holder of DigitalGlobe common stock or other stockholder of DigitalGlobe as to how such stockholder should vote with respect to the merger or any other matter. The terms of the merger were determined through arm’s-length negotiations between DigitalGlobe and MDA and were unanimously approved by the DigitalGlobe board of directors. Barclays did not recommend any specific form of consideration to DigitalGlobe or that any specific form of consideration constituted the only appropriate consideration for the merger. Barclays was not requested to opine as to, and its opinion does not in any manner address, DigitalGlobe’s underlying business decision to proceed with or effect the merger or the likelihood of consummation of the merger. In addition, Barclays expressed no opinion on, and its opinion does not in any manner address, the fairness of the amount or the nature of any compensation to any officers, directors or employees of any parties to the merger, or consideration to the holders of any other class of capital stock of DigitalGlobe, or any class of such persons, relative to the merger consideration to be offered to the holders of DigitalGlobe common stock in the merger or otherwise.

In arriving at its opinion, Barclays, among other things:

 

    reviewed and analyzed a draft of the merger agreement, dated as of February 22, 2017, and the material terms of the merger;

 

    reviewed and analyzed publicly available information concerning DigitalGlobe and MDA that Barclays believed to be relevant to its analysis, including the annual reports (on Form 10-K for DigitalGlobe) for the fiscal year ended 2015 and quarterly reports (on Form 10-Q for DigitalGlobe) for the fiscal quarters ended March 31, 2016, June 30, 2016 and September 30, 2016);

 

    reviewed and analyzed financial and operating information with respect to the business, operations and prospects of DigitalGlobe furnished to Barclays by DigitalGlobe, including the Scenario 1 projections;

 

    reviewed and analyzed financial and operating information with respect to the business, operations and prospects of MDA furnished to Barclays by DigitalGlobe, including (i) the MDA Forecasts and (ii) the DigitalGlobe Revised MDA Forecasts;

 

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    reviewed and analyzed the projections estimating the net operating losses of DigitalGlobe for the fourth quarter of 2016 through fiscal year 2021 included in the Scenario 1 projections and the Standalone NOL Projections;

 

    reviewed and analyzed the trading history of the DigitalGlobe common stock and MDA common shares for the twelve-month period ended February 16, 2017 and a comparison of that trading history with those of other companies that Barclays deemed relevant;

 

    reviewed and analyzed a comparison of the historical financial results and present financial condition of DigitalGlobe and MDA with each other and those of other companies that Barclays deemed relevant;

 

    reviewed and analyzed a comparison of the financial terms of the merger with the financial terms of certain other precedent transactions Barclays deemed to be relevant;

 

    reviewed and analyzed the expectations of the management of DigitalGlobe with respect to the pro forma impact of the merger on the future financial performance of the combined company, including the Synergy Projections, and other strategic benefits expected by the management of DigitalGlobe to result from a combination of the businesses;

 

    reviewed and analyzed published consensus estimates of independent research analysts with respect to the future financial performance and price targets of DigitalGlobe and MDA;

 

    reviewed and analyzed the relative contributions of DigitalGlobe and MDA to the historical and future financial performance of the combined company on a pro forma basis (reflecting certain pro forma financing assumptions provided by the management of MDA); and

 

    had discussions with the management of DigitalGlobe and MDA concerning DigitalGlobe’s and MDA’s respective businesses, operations, assets, liabilities, financial conditions and prospects and undertook such other studies, analyses and investigations as Barclays deemed appropriate.

In arriving at its opinion, Barclays assumed and relied upon the accuracy and completeness of the financial and other information used by it without any independent verification of such information (and has not assumed responsibility or liability for any independent verification of such information) and further relied upon the assurances of the management of DigitalGlobe that they were not aware of any facts or circumstances that would make such information inaccurate or misleading. With respect to the Scenario 1 projections, with the consent of DigitalGlobe, Barclays assumed that such projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of DigitalGlobe (subject to the assumptions set forth therein) as to the future financial performance of DigitalGlobe. With respect to the MDA Forecasts and the DigitalGlobe Revised MDA Forecasts, with the consent of DigitalGlobe, Barclays assumed that such projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of MDA or the management of DigitalGlobe, as applicable, as to the future financial performance of MDA. With respect to the net operating loss projections included in the Scenario 1 projections and the Standalone NOL Projections, with the consent of DigitalGlobe, Barclays assumed that the amounts of the net operating losses included in the Scenario 1 projections and the Standalone NOL Projections were reasonable and that the net operating losses contained therein would be realized in accordance with such estimates. Furthermore, with the consent of DigitalGlobe, Barclays assumed that the amounts and timing of the Synergy Projections were reasonable and that the Synergy Projections would be realized in accordance with such estimates. Barclays assumed no responsibility for and expressed no view as to any such projections or estimates or the assumptions on which they are based. In arriving at its opinion, Barclays did not conduct a physical inspection of the properties and facilities of DigitalGlobe or MDA and did not make or obtain any evaluations or appraisals of the assets or liabilities of DigitalGlobe or MDA. In addition, DigitalGlobe did not authorize Barclays to solicit, and Barclays did not solicit, any indications of interest from any third party with respect to the purchase of all or a part of DigitalGlobe’s business. Barclays’ opinion necessarily is based upon market, economic and other conditions as they existed on, and could be evaluated as of, the date of its opinion. Barclays assumed no

 

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responsibility for updating or revising its opinion based on events or circumstances that may occur after the date of its opinion. Barclays expressed no opinion as to the prices at which any shares of capital stock of DigitalGlobe or MDA would trade following the announcement or consummation of the merger, regardless of exchange listing or listings.

Barclays assumed that the executed merger agreement would conform in all material respects to the last draft reviewed by it. Barclays assumed the accuracy of the representations and warranties contained in the merger agreement and all agreements related thereto. Barclays also assumed, with the consent of DigitalGlobe, that all material governmental, regulatory and third party approvals, consents and releases for the merger would be obtained within the constraints contemplated by the merger agreement (and that, in the course of obtaining such approvals, consents and releases, no delay, limitation, restriction or condition would be imposed that would have a material effect on the combined company or the contemplated benefits of the merger) and that the merger would be consummated in accordance with the terms of the merger agreement without any material waiver, modification or amendment of any term, condition or agreement thereof. Barclays did not express any opinion as to any tax or other consequences that might result from the merger, nor does its opinion address any legal, tax, regulatory or accounting matters, as to which Barclays understood that DigitalGlobe obtained such advice as it deemed necessary from qualified professionals.

In connection with rendering its opinion, Barclays performed certain financial, comparative and other analyses as summarized below. In arriving at its opinion, Barclays did not ascribe a specific range of values to the shares of DigitalGlobe common stock but rather made its determination as to fairness, from a financial point of view, to the holders of DigitalGlobe common stock (other than DigitalGlobe, its subsidiaries, MDA and its affiliates) of the merger consideration to be offered to such holders in the merger on the basis of various financial and comparative analyses. The preparation of a fairness opinion is a complex process and involves various determinations as to the most appropriate and relevant methods of financial and comparative analyses and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to summary description.

In arriving at its opinion, Barclays did not attribute any particular weight to any single analysis or factor considered by it but rather made qualitative judgments as to the significance and relevance of each analysis and factor relative to all other analyses and factors performed and considered by it and in the context of the circumstances of the merger. Accordingly, Barclays believes that its analyses must be considered as a whole, as considering any portion of such analyses and factors, without considering all analyses and factors as a whole, could create a misleading or incomplete view of the process underlying its opinion.

The following is a summary of the material financial analyses used by Barclays in preparing its opinion to the DigitalGlobe board of directors. Certain financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses used by Barclays, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analyses. In performing its analyses, Barclays made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of DigitalGlobe or any other parties to the merger. None of DigitalGlobe, MDA, Merger Sub, Barclays, PJT Partners or any other person assumes responsibility if future results are materially different from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below. In addition, analyses relating to the value of the businesses do not purport to be appraisals or reflect the prices at which the businesses may actually be sold.

Historical Share Price Analysis

To illustrate the trend in the historical trading prices of DigitalGlobe common stock, Barclays considered historical data with regard to the trading prices of DigitalGlobe common stock for the period from February 16,

 

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2016 to February 16, 2017 and compared such data with the relative stock price performances during the same periods of MDA, a composite of Lockheed Martin Corporation, Orbital ATK Inc., Northrop Grumman Corporation, Raytheon Company, L3 Technologies Inc., BAE Systems plc, Thales SA and Harris Corporation, which we refer to as the “Aerospace & Defense Composite”, and a composite of Eutelsat Communications SA, Intelsat SA, Inmarsat PLC and SES SA, which we refer to as the “Satellites Composite”.

Barclays noted that during the period from February 16, 2016 to February 16, 2017, the closing price of DigitalGlobe common stock increased 106%, compared to MDA common shares which decreased 13%, the Aerospace & Defense Composite which increased 27% and the Satellites Composite which decreased 28%.

Selected Comparable Company Analysis—DigitalGlobe

In order to assess how the public market values shares of similar publicly traded companies, Barclays reviewed and compared specific financial and operating data relating to DigitalGlobe with selected companies that Barclays deemed comparable to DigitalGlobe. The selected comparable companies were Eutelsat Communications SA, Intelsat SA, Inmarsat SA and SES SA (in the satellites industry) and Lockheed Martin Corporation, Northrop Grumman Corporation, Orbital ATK Inc. and Raytheon Company (in the aerospace and defense industry).

Barclays calculated and compared various implied financial multiples and ratios of DigitalGlobe and the selected comparable companies. As part of its selected comparable company analysis, Barclays calculated and analyzed, among other things, each company’s ratio of (1) its equity value (based on fully diluted shares outstanding calculated using the treasury stock method) to projected leveraged free cash flow (or LFCF, calculated by subtracting capital expenditures from cash flow from operations) and (2) its enterprise value (calculated by adding short- and long-term debt and the value of any minority and preferred interests to equity value and subtracting cash and cash equivalents) to earnings before interest, taxes, depreciation and amortization and post-stock based compensation (or EBITDA (post-stock based compensation)), with and without adjustments for pensions. All of these calculations were performed and based on publicly available financial data and closing prices as of February 16, 2017. The results of this selected comparable company analysis are summarized below:

 

     Enterprise Value /
EBITDA (post-stock
based compensation)
     Enterprise Value /
EBITDA (post-stock
based compensation)
(with pension adj.)
     Equity Value /
LFCF
 
     2017E      2018E      2017E      2018E      2017E      2018E  

Average for Satellites Industry(1)

     7.6x        7.2x        7.6x        7.2x        11.9x        10.3x  

Median for Satellites Industry(1)

     7.3x        6.9x        7.3x        6.9x        11.8x        10.8x  

Average for Aerospace & Defense Industry(2)

     12.0x        11.3x        12.5x        11.8x        18.4x        17.7x  

Median for Aerospace & Defense Industry(2)

     12.6x        11.7x        12.9x        12.0x        18.0x        18.6x  

Total Average

     9.8x        9.2x        10.1x        9.5x        15.6x        14.5x  

Total Median

     9.5x        8.9x        9.5x        9.0x        15.8x        14.5x  

Scenario 1 projections(3)

     8.2x        6.6x        8.2x        6.6x        22.4x        11.3x  

DigitalGlobe (consensus estimates) (4)

     8.1x        7.6x        8.1x        7.6x        26.8x        19.4x  

 

(1)  LFCF calculated using normalized capital expenditure figures. Equity Value / LFCF Average and Median for Satellites Industry (and Total Average and Total Median) exclude Intelsat SA.
(2)  LFCF calculated using actual capital expenditure figures for projected periods.
(3)  LFCF calculated using normalized capital expenditure figures based on 2017-2021E average capital expenditure figures as per the Scenario 1 projections.
(4)  LFCF calculated using normalized capital expenditure figures per Wall Street consensus estimates.

Barclays selected the comparable companies listed above because Barclays believed their businesses and operating profiles are reasonably similar to that of DigitalGlobe. However, because of the inherent differences between the business, operations and prospects of DigitalGlobe and those of the selected comparable companies,