Canadian satellite and communications company MacDonald, Dettwiler and Associates Ltd. (MDA) on Feb. 24 agreed to acquire U.S. satellite imagery firm DigitalGlobe [DGI] for $2.4 billion in a deal that accelerates its plan to serve U.S. government customers.

“Today’s announcement creates a new company that will lead the industry by offering space systems and imaging solutions from inception to execution,” Howard Land, president and CEO of MDA, said in a statement. “This combination has the scale, resources and technology to serve the large and increasingly complex needs of government and commercial customers globally.”

Currently 29 percent of MDA’s $1.6 billion in annual sales are with customers in the U.S., about 10 percent of which is with the U.S. government. MDA said 27 percent of its sales are with customers in Canada. Following the close of the deal, which is expected to occur during the second half of 2017, the company said about one-quarter of its projected $2.3 billion in annual sales will be with the U.S. government.

MDA also said that currently about 80 percent of its revenue is through hardware sales but that once it acquires DigitalGlobe, data and services will make up 35 to 40 percent of the business.

MDA, which is publicly traded on the Toronto Stock Exchange, designs and produces communication satellites, satellite antenna subsystems, satellite radar and optical systems for surveillance and intelligence missions, satellite ground systems, robotics for space exploration and commercial applications and geospatial services.

DigitalGlobe, which is based in Colorado, operates a constellation of earth imaging satellites and sells imagery and analytics services to U.S. government, foreign government and commercial customers. The U.S. National Geospatial Agency (NGA) is its largest customer.

For MDA, the pending accusation will be its second in five years of a U.S. satellite firm following its $875 million acquisition of California-based Space Systems/Loral (SSL) in 2012. That deal helped MDA become a major player in commercial communications as SSL develops and produces commercial communications satellites.

MDA in 2008 was the target of an acquisition by the former U.S. defense and space firm Alliant Techsystems but that deal was rejected by the Canadian government, which felt there was no benefit to the country. Alliant two years ago merged with Orbital Sciences to create Orbital ATK [OA].

Edward Jurkevics, a principal and geospatial analyst with the consulting firm Chesapeake Analytics, told sister publication Defense Daily that once the deal with ATK was rejected, MDA set out to “Americanize the company” to get its stock valuation higher and grow its U.S. sales.

Jurkevics also said that with U.S. President Donald Trump’s commitment to lower corporate taxes, “it’s a no-brainer” for MDA to grow its business in the U.S. “It’s sort of an inversion,” he said.

MDA sought to mollify any concerns in Canada that the company isn’t committed to its parent country.

“MDA remains fully committed to its enduring and valued partnership with the Canadian government and our Canadian employees,” Lance said. “This combination offers the opportunity to deliver future economic and job growth in both Canada and the United States, as we focus on driving sustainable revenue expansion from our investments and create value for all our stakeholders.”

Once the deal closes, MDA will have 4,600 employees in the U.S. and 1,800 in Canada. DigitalGlobe will operate as a standalone division under SSL MDA.

In January, MDA’s SSL unit signed a Security Control Agreement with the U.S. Defense Department, allowing the company to more effectively pursue business with the U.S. government where security clearances are needed.

MDA chief Howard Lance, a U.S. citizen, led U.S. radio and communications company Harris Corp. [HRS] from 2003 until he retired in 2011. He became chief of MDA in 2016.

Last fall DigitalGlobe spent $140 million to purchase The Radiant Group, giving it more analytics capabilities to exploit its imagery and geospatial information content and expand its customer base across the U.S. intelligence and Special Operations communities.

MDA is using a combination of half cash and half stock to buy DigitalGlobe, with the $2.4 billion price representing an 18 percent premium to DigitalGlobe’s closing stock price on Feb. 16, which is the day before news broke about a possible acquisition. Including DigitalGlobe’s $1.2 billion in net debt, the enterprise value of the deal is $3.6 billion.

MDA expects the transaction to be accretive to its operating earnings in 2018. The company expects the combination to help it achieve between $57 million and $115 million in annual cost savings synergies by 2019.

DigitalGlobe’s financial advisors on the deal are PJT Partners and Barclays Capital. MDA’s financial advisor is Bank of America’s Bank of America Merrill Lynch.

Lance will continue to serve as president and CEO of MDA and president and CEO of SSL MDA Holdings. Three of DigitalGlobe’s current directors will be appointed to the MDA board.

The acquisition is subject to approvals by regulators and both companies’ shareholders. MDA said as part of the deal it will also apply to lists its shares on the New York Stock Exchange.