WASHINGTON Jan 8 The U.S. Justice Department is
expected to approve DigitalGlobe Inc's acquisition of
smaller rival GeoEye Inc later this month, according to
three sources familiar with the review.
Antitrust officials last month had raised critical questions
about the proposed merger, which will leave the United States
with only one commercial satellite imagery provider, but are now
"inching forward to a positive approval," said one source, who
was not authorized to speak publicly.
A second source said U.S. officials were not happy about the
loss of a second source of the commercial imagery, but
recognized that Pentagon budget cuts had undercut the business
case for a second provider.
"All indications are that they going to hold their noses and
approve it," said the source, who was also not authorized to
The sources said they expected the Justice Department to
wrap up its review by mid-January, but cautioned that no final
decision had been made.
The department's antitrust division also just got a new
chief, William Baer, who was sworn in on Jan. 3, which could
still delay the department's action.
Dougherty & Co published an investor note on Tuesday saying
it did not expect the Justice Department to oppose the merger.
It noted that the launch of the Pleiades-2 imagery satellite
by Astrium, a unit of European aerospace giant EADS,
had underscored the fact that earth observation was a
competitive global marketplace.
Dougherty said the merger could close in the first quarter,
with DigitalGlobe expected to take up to three weeks to complete
the financing needed.
It said shares of DigitalGlobe could rise after the merger
wins government approval. DigitalGlobe shares closed 92 cents or
3.5 percent higher at $27.20 on the New York Stock Exchange on
Tuesday, its highest level in two years.
GeoEye shares closed $1.31 or 4 percent higher at $33.99 on
the Nasdaq exchange, its highest level since summer 2011.
DigitalGlobe announced in July that it would acquire GeoEye
for $453 million to create the world's largest commercial
satellite imagery provider. In October, DigitalGlobe raised its
full-year sales forecast, citing increased sales of its
satellite images to businesses and U.S. intelligence agencies.
DigitalGlobe and GeoEye shareholders approved the merger at
separate meetings in December.