Gogo Finalizes Satcom Direct Acquisition and Plans Leadership Transition

Gogo Finalizes Acquisition of Satcom Direct and Leadership Changes

Gogo Inc. has officially completed its acquisition of Satcom Direct, marking a significant milestone in its strategy to enhance in-flight connectivity services. This newly formed entity emerges as the sole provider of multi-orbit and multi-band connectivity solutions tailored for the global business aviation and military/government mobility sectors.

The deal, valued at $375 million in cash, also involved the issuance of five million shares of Gogo stock to former Satcom Direct owners. Furthermore, Gogo could pay up to an additional $225 million if certain performance benchmarks are met within the next four years. The financial structuring of this transaction was facilitated through $250 million in new debt, complemented by $150 million in cash reserves from Gogo's finances.

While the interest on the debt is tied to the SOFR rate plus 6%, it’s anticipated to elevate Gogo's annual interest expenses by $25 million to $27 million. This acquisition may increase the company's net leverage ratio to approximately 3.6x by the end of 2024, yet Gogo expects to return to its target leverage range of 2.5x-3.5x within a year or two.

Immediately following the acquisition, Gogo has identified $18 million in recurring annual cost savings, with projections estimating total annual synergies ranging from $25 million to $30 million in the years to follow. This acquisition comes at a critical time as Gogo prepares to launch its new Galileo Low Earth Satellite (LEO) connectivity product, targeting a broader spectrum of clients, including Satcom Direct's extensive customer base of 1,300.

Chris Moore, formerly the President of Satcom Direct, is stepping into the role of Chief Executive Officer at Gogo, succeeding Oakleigh Thorne, who will transition into the position of Executive Chair. Moore expressed his enthusiasm for merging the strengths of both companies, a fusion he believes will lead to unparalleled connectivity solutions in the under-tapped global business aviation and government sectors.

The leadership shakeup continues with Zachary Cotner, previously Chief Financial Officer at Satcom Direct, now taking the reins as Gogo’s CFO. Mike Begler has also been promoted, now serving as Executive Vice President and Chief Operating Officer of the newly combined entity.

Support from Gogo's primary shareholders, including the private equity firm GTCR and Thorndale Farm Inc., has been robust, with no shares sold during the transaction. This backing reflects their bullish outlook on the future value of the combined organization.

Looking ahead, Gogo has reiterated its projections for 2024, anticipating total revenue between $400 million and $410 million. Furthermore, the company expects an Adjusted EBITDA of $120 million to $130 million, which accounts for various legal expenses and operational costs linked to strategic initiatives like Gogo 5G and Gogo Galileo.

The acquisition of Satcom Direct not only boosts Gogo's sales strategy for upcoming products but also allows a comprehensive platform catering to diverse customer needs in the global market.

In summary, as Gogo Inc. embarks on this new journey post-acquisition, it remains committed to enhancing its product offerings and driving growth in both the business aviation and military markets. Expect further updates on the integration of systems and technology as the company looks to revolutionize the in-flight experience for its users. For more information about Gogo’s services and ongoing developments, visit www.gogoair.com.