Broomfield-based Gogo Business Aviation (NASDAQ: GOGO) has announced the completion of its acquisition of Satcom Direct (SD) for $375 million in cash and 5 million shares of Gogo stock. The transaction includes potential additional payments of up to $225 million based on performance thresholds over the next four years. Gogo funded the deal through $250 million of debt and $150 million from its balance sheet. The interest rate on Gogo’s new debt is SOFR plus 6%, resulting in an estimated annual interest expense increase of $25 million to $27 million.
The acquisition is immediately accretive, achieving $18 million in annual recurring cost savings from day one, with a total expected run-rate cost synergy of $25 million to $30 million within two years. It is designed to accelerate the sales of Gogo’s forthcoming Galileo Low Earth Satellite (LEO) connectivity product.
“Combining with SD cements our position as the only in-flight connectivity provider able to satisfy the performance and cost needs of every segment of the global BA market,” said Oakleigh Thorne, Gogo executive chair.
Chris Moore, previously president of SD, has been appointed as Gogo’s CEO, succeeding Thorne, who transitions to executive chair, along with other post-closing leadership changes.
Gogo reiterated its standalone 2024 financial guidance, expecting total revenue in the range of $400 million to $410 million, Adjusted EBITDA of $120 million to $130 million, and Free Cash Flow between $55 million and $65 million. The combined company is projected to generate pro forma 2024 revenue of approximately $890 million and an Adjusted EBITDA margin of about 24%.
The company stated that its small-form-factor Galileo HDX LEO service is on track for customer shipments by the end of 2024, with plans to launch its large form factor Galileo FDX and Gogo 5G network in late Q2 2025.
