Monday’s announcement that DigitalGlobe will combine with GeoEye brings together two of the world’s largest commercial satellite imaging companies in a deal valued at $453 million. The transaction was anticipated in light of dramatic cuts to the U.S. government’s ten-year $7.3 Billion Enhanced View Contract that each company had been awarded. The valuation is low in comparison to that prior promised revenue stream, however the final dollar figure from that contract is still pending and the combination of the companies will reduce reliance on that revenue stream.
As the companies work through the steps of regulatory and shareholder approval on the deal, the task of combining and streamlining operations will begin. The anticipation is that the deal will be completed in the early first quarter of 2013. DigitalGlobe shareholders are expected to own about 64 percent of the combined company and GeoEye shareholders are expected to own approximately 34 percent. Through years of direct competition the two companies made investments to diversify their strengths and as a result the combined entity will build a better company from the parts.
The current satellite constellations of the two companies combines DigitalGlobe’s QuickBird, WorldView-1 and WorldView-2 with GeoEye’s Ikonos and GeoEye-1 satellites. The plan as presented is to move to a three-satellite constellation as the aging QuickBird and Ikonos reach the end of their lives. And there is also a commitment to complete the construction of the two satellites in development, with a new satellite to launch by 2014, and the other to launch by 2018.
It’s widely speculated that DigitalGlobe won the bulk of EnhancedView funding based on the strength of their constellation and their ability to image the same spot of the world more rapidly. In addition to a larger constellation, DigitalGlobe has diversified sensor collection with their current 8-band capability with Worldview-2 and their planned SWIR sensor for Worldview-3. These new sensing capabilities provide unique capabilities to sense and classify vegetation, land use and land cover that have advantages for agriculture, natural resources and extraction industries as well as military customers.
The companies share a common vision to move beyond collecting data into elevating insight, with a need to better understand our changing planet. There are great opportunities in the combined image libraries that offer more than a decade of insight into global change. Both companies have been working to combine earth imagery with expertise, with DigitalGlobe’s Analysis Center and GeoEye’s analytical products and services.
GeoEye has been more successful in packaging imagery with expertise with such offerings as their Marine Services with fisheries information and vessel monitoring sold as a service. They have also collected detailed 3D models of the world’s airports for next-generation aeronautical navigation products for their client GE, and have teamed with GeoStellar to create a countrywide solar map that combines solar potential with utility rates to provide insights into the economics of renewable energy. These combinations of addressing business problems with insights specific to changing conditions are also addressed by DigitalGlobe with their FirstLook and FirstWatch reports. We can expect an ongoing enhancement of these types of services and rapid response analysis with the combined strengths of these companies.
Streamlined Image Delivery
DigitalGlobe has focused a great deal on the speed of imagery delivery, with investments in new ground stations in Antarctica and around the globe that are now delivering imagery within an hour of being captured. The speed of delivery makes a difference particularly with evolving events such as natural disasters. The rapid delivery has been feeding news outlets with insights into global events, providing great marketing exposure for the kinds of insights that can be gleaned from satellite imagery, particularly in areas that are hard to reach for political or geographic reasons.
GeoEye has placed more of a focus on Web services, delivering their imagery via Software as a Service (SaaS) with their EyeQ platform. The combination of speedy delivery with streamlined web-based services that mesh nicely with enterprise information systems is a compelling combination for advanced location intelligence. Analytics are increasingly seen as a business advantage, and with more globalized supply chains, this rapid insight into evolving events will drive demand and increase revenue.
The combined operations of the two companies, with reduced capital costs, promise to position the combined company to invest in the new areas of growth. The company is poised to offer unique analytical and location intelligence services, particularly with new advancements with GIS and imagery analysis software that make deriving insight from imagery much more accessible to less technical users. While it’s hard to see the loss of a pioneering company and strong brand, the combined entity has a bright future in delivering new levels of insight into global change.