Gogo closes acquisition of Satcom Direct
December 4, 2024
Gogo has announced the completion of its acquisition of Satcom Direct (SD), creating a multi-orbit, multi-band, in-flight connectivity provider serving the the global business aviation (BA) and military/government mobility markets. The deal was first announced in September.
Gogo paid $375 million (€357.4m) in cash and issued five million shares of Gogo stock to SD ownership at close and could pay up to an additional $225 million tied to realising performance thresholds over the next four years. The transaction, including fees, was funded with $250 million of debt and $150 million of cash from the Gogo balance sheet.
The acquisition is expected to accelerate sales of Gogo’s soon-to-launch Galileo Low Earth Satellite (LEO) connectivity product, by:
- selling Gogo Galileo to SD’s 1,300 premium global broadband customers,
- selling 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, and
- leveraging SD’s strong presence in the Mil/Gov market where there is strong demand for LEO connectivity in combination with SD’s GEO connectivity.
“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. “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, have expressed support for the acquisition and did not sell any shares in the transaction.
Leadership Transitions
In connection with the completion of the combination, Chris Moore, President of SD, has been appointed Gogo’s Chief Executive Officer and will lead the combined company. He succeeds Thorne, who transitions to Executive Chair of the Gogo Board of Directors.
Moore said: “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 BA 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 of SD, has been appointed 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 Executive Vice President, Chief Operating Officer of the combined company.
Thorne continued: “I want to thank Jessi for her years of commitment and financial leadership at Gogo and wish her the best in her next chapter. As I transition to the Executive Chair role, I remain deeply committed to Gogo as a leader and an investor and look forward to working closely with Chris, Zach, Mike and our world-class team.”
As previously disclosed upon announcement of the transaction, the combined company is expected to generate pro forma 2024 revenue of approximately $890 million, Adjusted EBITDA Margin of approximately 24 per cent and Free Cash Flow of more than $100 million. Including the anticipated launch of Gogo Galileo, the combined company is expected to deliver long-term annual revenue growth in the 10 per cent range, Adjusted EBITDA Margins in the mid-20 per cent 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.