| Key Points: – Gogo will acquire Satcom Direct for $375 million in cash and 5 million shares of Gogo stock, expanding its in-flight connectivity solutions. – The combined company will offer multi-band, multi-orbit satellite solutions for business aviation and military/government markets. – The deal is expected to close by the end of 2024, providing cost synergies and significant revenue growth opportunities. |
In a significant move to bolster its position in the global in-flight connectivity market, Gogo Inc. (NASDAQ: GOGO) has announced the acquisition of Satcom Direct, a leading provider of geostationary satellite in-flight services for business aviation (BA) and military/government mobility markets. The transaction, valued at $375 million in cash and five million shares of Gogo stock, positions Gogo as the only multi-orbit, multi-band global connectivity provider catering to all segments of the BA market and government mobility sector.
The acquisition, which includes potential earn-out payments of up to $225 million based on future performance, will create significant synergies and accelerate Gogo’s long-term growth. Satcom Direct is expected to generate $485 million in revenue for 2024 with EBITDA margins of approximately 17%. With this acquisition, Gogo aims to expand its total addressable market to the 14,000 business aircraft located outside of North America.
Oakleigh Thorne, Chairman and CEO of Gogo, commented, “This transaction accelerates our growth strategies, expanding our global reach while enabling us to offer integrated satellite solutions. By combining Satcom Direct’s existing capabilities with Gogo’s Galileo LEO (Low Earth Orbit) solution, we can now offer unmatched performance to business aviation and military customers.”
Satcom Direct’s portfolio includes advanced geostationary satellite (GEO) and L-band offerings, which will be integrated into Gogo’s Galileo LEO satellite solutions. This multi-orbit approach will cater to both North American and international customers, providing premium connectivity options for all segments of the business aviation market. The deal also strengthens Gogo’s entry into the military and government mobility vertical, adding new revenue streams and diversifying the company’s customer base.
Chris Moore, President of Satcom Direct, expressed excitement about the acquisition, stating, “We are thrilled to be joining forces with Gogo, which shares our commitment to customer service and innovation. Together, we will unlock opportunities for new technologies, delivering even greater value to our clients worldwide.”
The acquisition not only boosts Gogo’s market presence but also delivers immediate financial benefits. The deal is expected to be accretive to earnings and free cash flow per share from the start, with projected annual run-rate cost synergies of $25-30 million within two years post-closing. Pro forma 2024 revenue for the combined company is expected to reach $890 million, with adjusted EBITDA margins of around 24%.
Looking ahead, Gogo anticipates long-term annual revenue growth of approximately 10%, driven by the combined strengths of its existing customer base and Satcom Direct’s extensive sales and service network. Additionally, the deal opens opportunities for technology upgrades and faster installations, thanks to the combined installed base of over 12,000 aircraft globally.
The transaction, unanimously approved by Gogo’s Board of Directors, is set to close by the end of 2024, pending regulatory approval and customary closing conditions.
