DigitalGlobe rejects $792.3-mn bid from rival GeoEye

Satellite imagery company DigitalGlobe Inc yesterday rejected a $792.3-million takeover bid from rival GeoEye Inc, saying the hostile bid undervalued the company and its financial prospects.

The Longmont, Colorado-based company said in a statement, ''the DigitalGlobe Board of Directors reviewed GeoEye's unsolicited acquisition proposal and unanimously determined that it substantially undervalues the company."

DigitalGlobe also noted that the offer also did not adequately recognise its "superior track record of financial and operating performance" considering it has three imagery-collecting satellites it orbit, while GeoEye has only two such satellites in orbit.

Both companies have since February held talks on a potential merger, but after talks broke down, GeoEye went public with its offer on 4 May, saying that the deal would create the world's largest fleet of commercial imagery satellites. (See: Satellite imagery company GeoEye to buy rival DigitalGlobe for $792.3 million)

DigitalGlobe said that under the discussions held since 12 February it had made a counter proposal to take over GeoEye in an all-stock transaction, where DigitalGlobe's stockholders would own around 60 per cent of the combined company with GeoEye stockholders owning the remaining 40 per cent.

Since a major part of revenues for both companies are generated from US government agencies and the Barack Obama administration is considering a fresh round of budget cuts, DigitalGlobe said that it would fare better than GeoEye and terminated its takeover offer. It said that It revived the offer after GeoEye made the $792.3 million takeover proposal only to see GeoEye reject it again.