MDA Space Ltd (MDA Space (MDA)) shares took a hit in Wednesday's after-hours session after the company announced a stock offering and a major acquisition. The space technology company said it has entered into a bought deal agreement with a group of underwriters to sell 20 million common shares at $35.60 per share. The underwriters also have a 30-day option to buy up to an additional 15% of the shares.

The offering is expected to close on or about July 14 and generate gross proceeds of $712 million. MDA Space plans to use the money to help fund its concurrently announced acquisition of a majority stake in Collecte Localisation Satellites (CLS), an Earth observation and satellite IoT solutions provider, and to repay some of CLS's debt.

MDA Space has made a firm and irrevocable offer to acquire a 70% interest in CLS for approximately CA$920 million ($649 million). The company noted that CLS is expected to generate around CA$465 million in revenue in 2026.

"Our goal is for MDA Space to provide global government and commercial customers with the broadest and richest offering of multi-sensor Earth and space observation data, products and services on the market," said Mike Greenley, CEO of MDA Space. "Bringing together MDA Space and CLS is a unique opportunity to create a growing, profitable, highly competitive and vertically integrated geospatial services business with industry-leading capabilities and go-to-market channels to address demand globally and accelerate growth for both businesses."

Investors seemed less enthusiastic about the dilution from the stock offering. MDA shares were down 7.94% in after-hours trading, changing hands at $35.60 at the time of publication.