Makes $140M Vricon Buy Out
June 24, 2020
Technologies is exercising its call option to take full ownership of 3D
data and analytics firm Vricon, Inc., for approximately $140 million, or
approximately $115 million net of estimated cash at closing. To fund the
transaction, Maxar intends to issue $150 million in aggregate principal
amount of new senior secured notes. Maxar has also agreed to repurchase
$150 million in aggregate principal amount of existing notes using the
proceeds of the recent sale of its MDA business.
Vricon is a global leader in satellite-derived 3D data for defense and
intelligence markets, with software and products that enhance 3D
mapping, Earth intelligence data, military simulation and training and
precision-guided munitions. The company was formed as a joint venture
between Maxar and Saab in 2015 to combine patented Saab IP with Maxar
commercial satellite imagery to build highly accurate, immersive 3D
products at scale.
Maxar intends to appoint Gilman Louie, Chairman of Vricon’s Board of
Directors, to the Maxar Board of Directors once the transaction closes.
Louie is co-founder and partner of Alsop Louie Partners, an early-stage
technology venture capital firm founded in San Francisco in 2006. Louie
is the founder and former CEO of In-Q-Tel, a strategic venture fund
created to help enhance national security by connecting the Central
Intelligence Agency and U.S. intelligence community with venture-backed
entrepreneurial companies. He also serves as a commissioner on the U.S.
National Security Commission on Artificial Intelligence.
Vricon’s products and technology are strongly aligned with Maxar’s Earth
Intelligence growth strategy and priority mission areas outlined in the
U.S. National Defense Strategy. Maxar expects that Vricon will extend
the company’s lead in existing markets with additional high-value growth
products, by increasing Maxar’s industry-leading accuracy and augmenting
automated feature extraction and change detection capabilities. In
addition, the transaction unlocks new and underpenetrated defense and
commercial markets for Maxar, such as autonomous navigation and 5G
telecommunications network planning.
“Maxar commercial satellite imagery has long been foundational to U.S.
and allied defense and intelligence operations, and this acquisition
will enable training, simulation and tactical missions to be conducted
in highly immersive and accurate 3D environments,” said Dan Jablonsky,
Maxar CEO. “Vricon will allow Maxar to accelerate the creation of a
living digital model of the Earth—'The Digital Globe™'—and become the
global geospatial reference standard for existing and next-generation
net cash purchase price would represent a valuation of roughly 10x, on a
net cash basis, the trailing 12-month adjusted EBITDA that Vricon
generated from third-party sales. We expect this multiple to step down
significantly over the next several years given the growth trajectory we
see for the business,” said Biggs Porter, Maxar CFO. “We would expect
the transaction to be additive to the 2020 guidance we issued on our
first quarter earnings call on May 11 while having an immaterial effect
on the company's leverage ratio this year. Furthermore, we expect the
business to be a solid cash generator, which we expect to contribute to
a reduction in both Maxar’s indebtedness and leverage starting in 2021.”
Maxar intends to exercise its call option to take control of Vricon on
or about June 25, 2020, and expects the transaction to close in July.
Maxar expects to fully integrate Vricon to improve existing products,
develop new capabilities and pursue game-changing business
opportunities. When Maxar’s next-generation WorldView Legion imaging
satellites come online in 2021, higher volumes of more frequently
refreshed, high-resolution imagery will further improve the currency and
utility of Vricon offerings and should drive subscription sales