DigitalGlobe Rejects Unsolicited Acquisition Proposal by GeoEye

Sun May 6, 2012 1:15pm EDT

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  LONGMONT, CO, May 06 (Marketwire) -- 
DigitalGlobe, Inc. (NYSE: DGI) ("DigitalGlobe" or the "Company"), a
leading global provider of high-resolution earth imagery solutions, today
commented on the unsolicited proposal announced by GeoEye, Inc. (NASDAQ:
GEOY) ("GeoEye") to acquire the Company for $17.00 per share in a
combination of cash and stock.

    Consistent with its fiduciary duties and in consultation with its
independent financial and legal advisors, the DigitalGlobe Board of
Directors reviewed GeoEye's unsolicited acquisition proposal and
unanimously determined that it substantially undervalues the Company in
relation to DigitalGlobe's standalone business and financial prospects,
and is not in the best interests of the Company's stockholders. In
addition, the Board determined that GeoEye's proposal does not adequately
recognize DigitalGlobe's superior track record of financial and operating
performance as well as its constellation's greater capabilities. 

    DigitalGlobe noted that GeoEye made previous private unsolicited
proposals, beginning on February 7, 2012, which the Company believes were
motivated by GeoEye's concerns with the disproportionate risks of
government budgets cuts affecting its business. DigitalGlobe rejected
those proposals, but was willing to discuss DigitalGlobe acquiring
GeoEye, and proposed a transaction under which DigitalGlobe's
stockholders would own approximately 60% and GeoEye stockholders would
own approximately 40% of the combined company, with DigitalGlobe's
Chairman and Chief Executive Officer continuing in their respective
leadership roles. DigitalGlobe terminated those discussions because the
Company believed that the U.S. Government process would be favorable to
DigitalGlobe, and that protracted discussions would be disruptive to the
U.S. government in its decision-making process as well as create needless
distraction to ongoing mission performance. 

    Following GeoEye's public hostile offer last Friday, DigitalGlobe again
made the same proposal for the Company to acquire GeoEye, conditioned on
reaching agreement over the weekend. Given GeoEye's rejection of that
proposal, DigitalGlobe terminated discussions and will await the
government reaching its budget decision regarding EnhancedView. When the
government reaches its decision, DigitalGlobe will consider whether to
make a proposal to acquire GeoEye.

    "DigitalGlobe has consistently demonstrated superior operating
performance compared to GeoEye, including the stronger relative
performance on the EnhancedView program," said Jeffrey R. Tarr, President
and Chief Executive Officer of DigitalGlobe. "DigitalGlobe is the only
provider in the industry with a constellation of three healthy on-orbit
high resolution satellites, which allows us to deliver vastly more
imagery to NGA than GeoEye, both in total and per-taxpayer dollar,
generating significant value for the government and taxpayers. We are
enthusiastic about our prospects and the opportunities before us, and our
ability to successfully execute on our strategic plan to create value for
our customers and shareowners."

    Mr. Tarr continued, "Given the abruptness of GeoEye's most recent
proposal and the companies' past discussions, we believe GeoEye made its
hostile bid in desperation due to highly publicized concerns about
potential government decisions that may jeopardize their portion of the
EnhancedView program. Although we continue to believe there are merits to
an acquisition of GeoEye, we believe that it is in the best interests of
DigitalGlobe's shareowners and all of our customers to await the
conclusion of the government budget decision process and to gain clarity
with respect to EnhancedView funding."

    The full text of the letter sent today to Matthew M. O'Connell, Chief
Executive Officer of GeoEye follows:

    May 6, 2012

    Mr. Matthew M. O'Connell
 President and Chief Executive Officer
 GeoEye,
Inc.
 2325 Dulles Corner Blvd
 Herndon, VA 20171

    Dear Matt:

    We are writing in response to GeoEye's unsolicited conditional "public
offer" to acquire DigitalGlobe made in your letter dated May 4, 2012. Our
board of directors has met, has carefully considered your proposal and
has concluded that GeoEye's proposal is not in the best interests of
DigitalGlobe and its shareholders. Accordingly, DigitalGlobe rejects your
offer. Given the abruptness of your "public offer" and our past
discussions, we believe you made your hostile bid in desperation due to
well-publicized concerns about potential government decisions that may
jeopardize your portion of the EnhancedView program.

    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. 

    Moreover, before we terminated discussions of a potential combination to
await the government's funding decision, the proposed transaction we were
discussing contemplated that DigitalGlobe would designate a majority of
the Board and that DigitalGlobe's shareholders would own a substantial
majority of the surviving company. Your May 4 letter fails to mention
that we proposed to acquire GeoEye in an all-stock transaction on March
2, 2012 and reaffirmed the same offer on April 13, 2012, whereby:


--  DigitalGlobe's shareholders would own 60% and GeoEye's shareholders
    would own 40% of the combined company;
--  DigitalGlobe would control a majority of the Board; and
--  DigitalGlobe's Chairman and CEO would continue in their respective
    leadership roles of the combined company.

    

This structure would maximize value to both sets of shareholders and
customers. Furthermore, we believe our proposed structure more accurately
reflects the value of DigitalGlobe and recognizes:


--  The strength of DigitalGlobe's constellation of three healthy on-orbit
    high resolution satellites;
--  DigitalGlobe's differentiated capabilities, which allow us to deliver
    vastly more imagery to the National Geospatial Intelligence Agency
    ("NGA") than GeoEye, both in total and per-taxpayer dollar, generating
    significant value for the government and taxpayers;
--  DigitalGlobe's superior current collection and delivery capabilities,
    which enable it alone to provide substantially all of what NGA is
    currently receiving from both companies under EnhancedView at
    substantially lower cost;
--  The superior performance of DigitalGlobe on the EnhancedView program
    as indicated by the repeated, large holdbacks you have incurred
    against your Service Level Agreement ("SLA") -- which we believe may
    indicate significant shortfalls in performance against NGA's
    requirements; and
--  DigitalGlobe's dramatically higher organic growth as evidenced by our
    1Q 2012 revenue growth rate of 12%, compared to only 3% for GeoEye.

    

Despite the superior benefits to both of our shareholders and
customers from our proposal to acquire GeoEye, you rejected our offer
both in March and again in April. At that point, recognizing that the
federal government was finalizing its budget process, we felt that we
should terminate discussions and withdraw our offer. 

    We expected the budget process outcome would be favorable to DigitalGlobe
and its shareholders and believed that protracted discussions between our
companies at that time would be disruptive to the U.S. government in its
decision-making process as well as create needless distraction to ongoing
mission performance.

    Therefore, we were surprised by your most recent unsolicited "public
offer" given GeoEye's continued government funding uncertainty. You even
acknowledged in your Form 10-Q filing on May 4, 2012 that "management
foresees continued uncertainty" regarding funding of your cost share
payments beyond the amount to which the NGA is currently obligated. Based
on your cost share disclosure, May 4, 2012 earnings call and unsolicited
bid, we are concerned about your overall EnhancedView program funding. 

    In response to your hostile "public offer," on May 4, 2012, in our May 5,
2012 letter to you we again reiterated our interest in an acquisition of
GeoEye on the terms substantially similar to those we previously offered
to you. Unfortunately, in discussions between counsel on May 5, 2012, you
again rejected our proposal. We continue to believe there are merits to a
potential acquisition of GeoEye, but at this time, we also believe that
it is in the best interests of DigitalGlobe's principal constituencies,
including our shareholders and all of our customers, to await the
conclusion of the government budget decision process and to gain clarity
with respect to EnhancedView funding. When the government reaches its
decision, DigitalGlobe will consider whether to make a proposal to
acquire GeoEye. 

Sincerely,

/s/ Jeffrey R. Tarr                    /s/ Gen. Howell M. Estes III

Jeffrey R. Tarr                        Gen. Howell M. Estes III (USAF, Ret.)
President and Chief Executive Officer  Chairman of the Board
DigitalGlobe, Inc.                     DigitalGlobe, Inc.

    
Skadden, Arps, Slate, Meagher & Flom LLP is serving as DigitalGlobe's
legal counsel, and Morgan Stanley and Barclays are serving as
DigitalGlobe's financial advisors. 

    About DigitalGlobe
 DigitalGlobe is a leading global provider of
commercial high-resolution earth imagery products and services. Sourced
from our own advanced satellite constellation, our imagery solutions
support a wide variety of uses within defense and intelligence, civil
agencies, mapping and analysis, environmental monitoring, oil and gas
exploration, infrastructure management, Internet portals and navigation
technology. With our collection sources and comprehensive ImageLibrary
(containing more than two billion square kilometers of earth imagery and
imagery products) we offer a range of on- and off-line products and
services designed to enable customers to easily access and integrate our
imagery into their business operations and applications. For more
information, visit www.digitalglobe.com.

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Contacts:
David Banks
DigitalGlobe
(303) 684-4210

Joele Frank / Eric Brielmann / Scott Bisang
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449 

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