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

PROCEEDS TO SHAREHOLDERS

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.

MDA will pay $774 million in cash for all of the equity of SS/L. It will also pay $101 million through a bank guaranteed three-year promissory note for certain real estate assets that are tied to the SS/L business.

Loral said its board intends to evaluate alternatives for returning to shareholders the after-tax proceeds resulting from the divestiture of SS/L.

Loral’s other businesses include a 64% interest in Telesat, which owns a global fleet of satellites. It provides video broadcasting to customers across the globe and also offers broadband services for corporate, telecom and government clients.

The proposed deal for SS/L comes roughly four years after the Canadian government stepped in to block a C$1.33 billion ($1.29 billion) sale of MDA’s own satellite arm to U.S. rival Alliant Techsystems Inc, on the basis that the deal was not of ‘net benefit’ to the country.

Canada feared that the sale of the MDA unit would have led to the loss of crucial technology and hampered its satellite surveillance capabilities. It marked the first time that the country used the powers of the Investment Canada Act to block a foreign takeover of Canadian assets.

Bank of America Merrill Lynch acted as lead financial advisor to MDA in connection with the transaction. RBC Capital Markets also provided financial advice to MDA. Credit Suisse and J.P. Morgan acted as financial advisors to Loral on the deal.