Gogo has announced that it has completed its acquisition of Satcom Direct (“SD”), creating what Gogo says is the only multi-orbit, multi-band, inflight connectivity provider that serves every segment of the global business aviation and military/government mobility markets.
In a release, Gogo stated that it paid US$375 million in cash and issued five million shares of Gogo stock to SD ownership to close the acquisition. The transaction, including fees, was funded with $250 million of debt and $150 million of cash from the Gogo balance sheet. Gogo may pay up to an additional US$225 million to SD, if certain performance thresholds are realised over the next four years.
Gogo says the transaction is immediately accretive, with US$18 million of annual recurring cost savings achieved immediately after the acquisition closed, and a total expected $25 million to $30 million in annual run-rate cost synergies to be achieved in the two years after close.
A key reason for the acquisition is that Gogo expects it will accelerate sales of Gogo’s soon-to-launch Galileo Low Earth Satellite (LEO) connectivity product. Gogo plans to sell Galileo to SD’s 1,300 premium global broadband customers. It also plans to sell new Galileo installs through the SD international sales force to the 12,000 medium and smaller business aircraft outside North America that have no broadband solution available today. Gog also plans to leverage SD’s strong presence in the military/government market, where it sees strong demand for LEO connectivity in combination with SD’s GEO connectivity.
The combined company expects to generate pro forma 2024 revenue of approximately US$890 million, an Adjusted EBITDA margin of approximately 24%, and Free Cash Flow of more than $100 million. Including the anticipated launch of Gogo Galileo, the combined company expects to deliver long-term annual revenue growth in the 10% range, Adjusted EBITDA margins in the mid-20% range, and “significant” Free Cash Flow accretion, which will support strategic investments, ‘de-levering’, and return of capital to shareholders.
Additionally, Gogo reiterates that its small-form-factor Galileo HDX LEO service remains on track to begin shipping to customers by the end of 2024, and it expects to launch its large-form-factor Galileo FDX, and its Gogo 5G network, late in the second quarter of 2025.
“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 business aviation market,” said Oakleigh Thorne, executive chair at Gogo. “With the launches of our next-generation LEO and 5G technologies, Gogo and SD are uniquely positioned to drive growth and future value creation.”
Gogo’s principal shareholders, GTCR, a private equity firm, and Thorndale Farm Inc., expressed support for the acquisition and did not sell any shares in the transaction, reflecting their confidence in the long-term value-creation potential of the combined company.
Leadership changes
The acquisition has also brought in some leadership changes at the companies. Chris Moore, president of SD, has been appointed a Gogo’s Chief Executive Officer. Moore will lead the combined company, bringing years of satellite and telecommunications experience to his new role. He succeeds Oakleigh Thorne, who transitions to the role of Executive Chair of the Gogo board of directors.
Chris Moore said of the transaction, “Uniting the complementary strengths of Gogo and SD marks an exciting new chapter for us as one company. Together, we are uniquely positioned to deliver unparalleled in-flight connectivity solutions across the underpenetrated global business aviation and military/government mobility markets. I am excited to expand Gogo’s reach and continue its legacy of exceptional service and cutting-edge technology.”
In addition, Zachary Cotner, Chief Financial Officer at SD, has been appointed as Chief Financial Officer of the combined company, succeeding Jessi Betjemann. Mike Begler, who previously served as Senior Vice President of Gogo Production Operations, has been appointed to the role of Executive Vice President, and Chief Operating Officer of the combined company.
