MDA Space Ltd. shares dropped about 5% in after-hours trading Wednesday after the company disclosed a common share offering intended to help fund its deal to acquire a controlling stake in Collecte Localisation Satellites (CLS).
The Toronto- and New York-listed company has agreed with underwriters led by BMO Capital Markets and RBC Capital Markets to issue 20 million common shares at $35.60 each, a placement that equates to approximately $712 million in gross proceeds. The underwriters were also granted an over-allotment option allowing them to purchase up to an additional 15% of the offering at the same price within 30 days of closing.
MDA Space said it plans to apply net proceeds from the offering toward a portion of the purchase price for its acquisition of approximately 70% of CLS. The company also noted that, should it be unable to secure debt financing, it may use the offering proceeds to repay CLS’ existing indebtedness, and otherwise to cover related financing fees and transaction expenses.
The securities offering is scheduled to close on or about July 14, 2026, subject to customary closing conditions including listing approvals from the New York Stock Exchange and the Toronto Stock Exchange. MDA Space explicitly stated that the closing of the equity offering is not contingent on the closing of the acquisition, and the acquisition closing is likewise not conditional on the equity offering.
Under the previously announced purchase terms, MDA Space would acquire roughly 70% of CLS for approximately 0567 million in cash, an amount the company cited as roughly $920 million. The French space agency CNES would retain an approximate 30% stake in CLS following the transaction.
CLS is expected to generate about 0286 million (465 million) in revenue during 2026 and currently serves more than 14,000 customers across roughly 150 countries, according to MDA Space A0 A0statements in the transaction disclosure. The company projects the acquisition will double its recurring revenue stream and be accretive to Adjusted EBITDA and Adjusted EPS within the first year of ownership. CLS A0 A0expected Adjusted EBITDA margins are reported to be in line with MDA Space's 2026 full-year outlook of 18% to 20%.
MDA Space added that the broader transaction is expected to close by the end of 2026 or in early 2027, contingent on receiving requisite regulatory approvals and completing mandatory information and consultation procedures.
Key financial mechanics of the deal, the timetable for closing, and the contingent use of proceeds for debt repayment were the primary points driving investor reaction in after-hours trading. The equity offering structure includes the typical underwriter over-allotment feature and requires listing clearances from both exchanges before the sale completes.