(By Balachander) MacDonald, Dettwiler & Associates Ltd (TSE: MDA) shares were upgraded to "Sector Outperformer" from "Sector Performer" by CIBC World Markets Inc. analyst Stephanie Price.
The company announced that the DoJ has completed its review of the Space Systems/Loral Inc. (SS/L) acquisition and it has been granted early termination of the 30-day waiting period under HSR.
Price, who raised price target on the stock to $66.00 from $54.50, believes MDA now has all regulatory approvals in place and expects the acquisition to close during Q4.
On June 26, MDA announced an agreement to acquire SS/L for US$875 million (5.7x EBITDA). The acquisition allows MDA to gain critical mass in the commercial satellite manufacturing industry and better positions the company to win U.S. defense and intelligence work, Price noted.
In addition, the analyst views the acquisition as very accretive, given the low valuation (vs. MDA's 6.8x EBITDA multiple), tax shields (US$120 million), and the financing of the transaction.
Shares jumped 9.59 percent to trade at $54.99 on the Toronto Stock Exchange on Monday.