MacDonald Dettwiler to buy Loral subsidiary for $875 million

TORONTO (Reuters) - Loral Space & Communications Inc (LORL.O) said on Tuesday it has agreed to sell its satellite manufacturing subsidiary, Space Systems/Loral to Canadian communications rival MacDonald, Dettwiler and Associates Ltd (MDA.TO) for about $875 million.

The deal is set to enhance Macdonald Dettwiler's position in the communications arena and creates potential for increased business with both commercial and government clients.

"The combination is a very good strategic fit for both companies," John Celli, President of Space Systems/Loral said in a statement.

The boards of both companies have approved the deal, which is expected to close later this year after certain regulatory approvals.

Loral said in addition to the $875 million it will also receive cash dividends and other payments from its SS/L subsidiary, which are expected to be in excess of $135 million.

(Reporting by Euan Rocha; Editing by Edwina Gibbs)