Maxar splits back into two business units, but stops short of calling them "SSL" and "DigitalGlobe"

Our 2020 Maxar initiation report bluntly concluded that the combination of an EO company and a GEO satellite manufacturer was “not a combination that most strategy officers or investment bankers would put high on their priority list. It is, however, the reality that management and investors must contend with for the foreseeable future.” Well, the future has arrived, and Maxar’s PE owners announced that they are separating the two business units into separate operating companies. 

How did we get here? Maxar was formed in 2017 when Canada’s MDA, which owned the famed American satellite manufacturer Space Systems Loral (SS/L), acquired DigitalGlobe – the world’s largest EO satellite operator by revenue. The merger was primarily motivated by MDA’s desire to redomicile in the U.S. Operational synergies were arguably a secondary priority, although DigitalGlobe subsequently awarded its prized Legion satellite manufacturing contract to SS/L. 

The merger, which left Maxar dangerously leveraged (net debt/EBITDA of 5x, rising to a peak of 7.5x), went sideways from the beginning due to a severe commercial GEO order slump that began in 2015 and persists to this day. Less than a year after the merger was completed, Maxar attempted to sell or shut down the SS/L business, but was forced to retain the business after failing to receive an attractive bid. 

Taking the long view, Maxar reoriented the SS/L business to focus on the civil, DoD, and LEO constellation markets, and hired Chris Johnson from Boeing Satellite Systems to run the business. In 2022, Maxar was awarded a pivotal 14-satellite SDA contact from L3Harris, but SS/L’s most important contract – to manufacture Maxar’s own Legion constellation – remains mired in manufacturing delays that are running two, going on three years behind schedule. 

While the Legion program will keep the two companies joined at the hip for the near-term, the forced marriage between the companies has reached its logical conclusion. Moving forward, each company will pursue its independent path, which may or may not converge beyond Maxar’s current order for eight Legion satellites.

SOURCE: https://spacenews.com/maxar-technologies-to-reorganize-under-two-separate-businesses/