The Vancouver-area company, which has a presence in Ottawa, says the addition of Space Systems/Loral Inc. will give it a critical mass in the U.S. market and global opportunities for growth.
"This is a game changing transaction for our company," Daniel Friedmann, MDA's president and CEO, said in announcing the deal.
"With one move, we are bringing together two market leaders to create a unique global communications and information company with a strong commercial focus. Post acquisition, more than two-thirds of MDA's total revenues will come from the commercial market."
MacDonald, Dettwiler is best known as the maker of the robotic arms used on the International Space Station and the now-retired U.S. space shuttles.
It had attempted to sell its satellite division several years ago to U.S. defence contractor Alliant Techsystems of Edina, Minn., but was blocked from doing so by the Harper government, which cited national security reasons.
MDA has also been involved in a variety of businesses that use satellites to collect information from space. It warned in March that the federal budget didn't include the money needed to advance that Radarsat Constellation Mission as envisaged.
It's buying SS/L from Loral Space & Communications under a definitive agreement announced late Tuesday.
In addition to receiving US$774 million cash for SS/L's equity and US$101 million for certain real-estate used by the California-based company, Loral Space will receive US$112 million in cash dividends from SS/L.
"Combining the world-recognized communications capabilities of MDA with SS/L creates a powerful space communications leader and enhances the business prospects, both commercial and government, for each of MDA and SS/L," said Michael B. Targoff, chief executive officer of Loral Space & Communications.
"With this transaction, SS/L's employees, customers and suppliers should be confident as to the long-term prospects and direction for this highly valued contributor to the global communications infrastructure."
John Celli, president of Space Systems/Loral, said the combination was a good strategic fit for both companies.
"Together we will be in an even stronger position to support the growth requirements of both new and existing customers," Celli said.