Gogo Inc. (NASDAQ: GOGO) and Satcom Direct have announced a definitive agreement under which Broomfield-based Gogo will acquire Satcom Direct, establishing a multi-orbit, multi-band provider of global in-flight connectivity for the business aviation and military/government mobility markets.
Under the terms of the agreement, Satcom Direct will receive $375 million in cash, 5 million shares of Gogo stock at closing and up to $225 million in additional payments based on performance thresholds over the next four years. Melbourne, Fla.-based Satcom Direct is a global business aviation geostationary satellite in-flight connectivity service provider.
In 2024, Satcom Direct is projected to generate approximately $485 million in revenue with EBITDA margins of around 17%, with 80% of its revenue coming from the business aviation market and 20% from military/government sectors.
Gogo Chairman and CEO Oakleigh Thorne said, “This transaction accelerates our growth strategies of expanding our total addressable market to include the 14,000 business aircraft outside North America, and delivering solutions that meet the needs of every segment of the BA market.” Thorne also highlighted the benefits of integrated GEO-LEO satellite solutions for customers.
Chris Moore, Satcom Direct president, said, “Satcom Direct is thrilled to be joining forces with Gogo, a company that shares our focus on delivering outstanding service and leading innovation.”
The transaction is expected to offer strategic and financial benefits, including creating a unique product line for business aviation, expanding market reach and unlocking immediate cost savings with annual run-rate synergies estimated at $25-30 million in the two years following the close.
Following the acquisition, Gogo anticipates pro forma 2024 revenue of around $890 million, an adjusted EBITDA margin of approximately 24%, and free cash flow exceeding $100 million. Gogo aims for long-term annual revenue growth in the 10% range and adjusted EBITDA margins in the mid-20% range.
The agreement has been unanimously approved by Gogo’s Board of Directors and is subject to regulatory approvals and customary closing conditions, with expected completion by the end of 2024. The transaction will be financed through cash-on-hand and $275 million in new debt commitments.