Maxar Technologies [MAXR] last Friday said it has agreed to be acquired by the private equity firm Advent International

for about $4 billion in cash, a $53 per share price that is 129 percent above the closing price of the company’s shares last Thursday and about 34 percent above the high point of Maxar’s 52-week trading period.

The enterprise value of the deal is $6.4 billion, and includes the assumption of $2.4 billion in debt. With Advent’s resources and the increased financial flexibility gained by going private, Maxar will be able to accelerate portions of a new Earth observation satellite fleet and pursue new merger and acquisition targets, Daniel Jablonsky, Maxar’s president and CEO, told Defense Daily.

The acquisition is expected to close in mid-2023, subject to approvals by regulators and Maxar shareholders.  The deal terms include a 60-day “go-shop” period that expires Feb. 14, 2023 and allow Maxar’s board to solicit alternative acquisition proposals.

Once Advent completes the acquisition, Maxar plans to accelerate the launch of the Worldview Legion 7 and 8 satellites, which will eventually complement the first six electro-optic earth observation satellites that will begin to be launched early in 2023. Jablonsky said satellites 7 and 8 were planned for later this decade, although he declined to how much sooner they will become part of the Legion fleet.

In the past two years, Maxar has acquired Vricon, which it already had a 50 percent interest in, and more recently Wovenware. The $150 million Vricon deal provided artificial intelligence and machine learning (AI/ML) technology for 3-dimensional “digital twins” of Earth. Wovenware was a smaller acquisition but further bolstered Maxar’s capabilities in AI and software capabilities.

Maxar is also a strategic investor in Aurora Insight, which develop satellites that do radio frequency-based analytics.

There is room for more deals in the AI/ML space, particularly in the area of modeling and simulation “that matches the real-world globe where people live, work, transit, fight wars, do those kinds of things,” Jablonsky said. “Having physics-based models that you can run AI across with multi-sensor, multi-element inputs into that data architecture and structure is really attractive, because it helps…our customers, the largest defense intelligence organizations in the world solve problems faster.”

“The most exciting things we find are the things that are growing fastest,” he said. “So, across our portfolio, space technologies and Earth intelligence products and services. What I say is we really like the stuff that’s tech oriented and that has fast growth and customer adoption rates.”

Maxar is one of the largest pureplay companies in the commercial satellite and remote sensing space. The commercial space market is burgeoning with new launch providers, satellite developers and analytics providers.

“In our view, the deal points to the attractiveness and opportunities in space, which have been discounted by the public markets and ongoing consolidation which could occur as opportunities materialize,” Greg Konrad, an aerospace and defense analyst with Jefferies, said in a note to clients last Friday.

Caleb Henry, senior analyst for Quilty Analytics, a boutique space and satellite research firm, said the deal values Maxar strongly and looks like a “healthier” private equity deal, as it seems that Advent intends to invest in Maxar versus adding debt to the company. 

Most of the funding–$3.1 billion—is coming from Advent and British Columbia Investment Management Corporation is contributing $1 billion.

“We will prioritize Maxar’s commitment as a core provider to the U.S. defense and intelligence communities, and allies, while providing Maxar with the financial and operational support necessary space, to apply its technology and team members even more fully to the mission and programs of its government and commercial customers,” David Mussafer, chairman and managing partner of Advent, said in a statement.

Maxar has four satellites on orbit, which collect imagery over more than 3.8 million square kilometers per day, and it is expanding its constellation with six new WorldView Legion satellites. These new satellites will be able to show an object’s true location on the ground within five meters, a level of position accuracy that Maxar has said will serve self-driving vehicles.

The company’s imagery is used by the U.S. government, and it is part of the National Reconnaissance Office’s program to buy commercial imagery, with a contract worth up to $3.2 billion over 10 years.

Maxar’s satellite imagery has been front and center in the war in Ukraine. Its unclassified imagery was used in countless news stories from the early days of the war when Russia first invaded Ukraine, even underpinning reporting by The New York Times and BBC about the massacre in Bucha, refuting Russia’s claims.

The deal also gives Maxar cash to fuel its competition against the imagery SPACs Planet, BlackSky, and Satellogic, which went public in the last two years, Henry said. 

“This deal basically gives Maxar SPAC money they didn’t get because they were already public,” Henry said. “I would expect Maxar to foster some consolidation on the analytics side, because that is where they have put a lot of their focus in recent years. The Vricon acquisition was really transformative for them as a company. I would expect that they become a buyer of at least one, if not more, analytics firms.”

The company also manufactures satellites and there are more than 80 Maxar-built satellites on orbit. It has supported many commercial customers including Intelsat [INTEQ] and SiriusXM [SIRI] satellite radio satellites. Earlier this year, L3Harris Technologies [LHX] selected Maxar as a subcontractor on its Space Development Agency Tranche 1 Tracking Layer contract to build 14 spacecraft platforms.

However, Maxar has had challenges manufacturing the Jupiter 3 satellite for Hughes Network Systems, an EchoStar [SATS] subsidiary. The satellite was originally supposed to launch in 2021, but has been delayed multiple times. Recently, Maxar agreed to waive about $50 million in fees to EchoStar to compensate for additional delays in the program.

“Maxar has been challenged by the lack of a strong digital payload that it can sell to the market, and also in the past, felt very overexposed to the commercial GEO [Geostationary Orbit] market,” Henry said. “Maxar has diversified with early success into the civil and defense markets. Because of Advent’s focus on the defense side in the announcement, my guess would be they are enthusiastic about Maxar’s growth in the defense market, particularly with the Space Development Agency. I imagine seeing more of that.”

Maxar’s financial adviser on the deal with Advent is J.P. Morgan. Advent is being advised by Goldman Sachs & Co.

Via Satellite reporter and editor Rachel Jewett contributed to this article.