Two of the main imagery contractors to the National Geospatial-Intelligence Agency (NGA) have put in bids to try and buy each other. The bids have failed.
DigitalGlobe and GeoEye have each proffered hostile acquisition bids in the last few days after apparently being in talks over the last few weeks. GeoEye recently had its bid for DigitalGlobe rejected as being “substantially undervalued.” It was worth $792 million.
According to industry watchers, the bids are coming on the back of expected cuts in the Enhanced View contract from the NGA.
Digital Globe’s letter to GeoEye contains language highly critical of GeoEye, and seems to feel that if there are budget cuts it will be Digital Globe who will emerge safely, not their competitors:
We believe you initiated discussions with us with your unsolicited highly conditional private offer on February 7, 2012 because you were concerned about a disproportionate risk of budget cuts affecting GeoEye. We believe you have mischaracterized subsequent discussions in your May 4 letter as well as during your Friday investor call. In fact, we believe your public description of such discussions in your May 4 letter is materially misleading and incomplete.
Update. GeoEye is “disappointed” in the rejection and will “consider its options.”