Gogo Completes Acquisition of Satcom Direct and Announces Leadership Transition

Core Viewpoint - Gogo Inc. has completed the acquisition of Satcom Direct, positioning itself as the only multi-orbit, multi-band in-flight connectivity provider for the global business aviation and military/government mobility markets [1][4]. Financial Summary - Gogo paid $375 million in cash and issued five million shares to Satcom Direct's ownership, with potential additional payments of up to $225 million based on performance over the next four years [2]. - The acquisition was funded with $250 million in debt and $150 million in cash from Gogo's balance sheet [2]. - The interest rate on the new debt is SOFR plus 6%, leading to an estimated increase in annual interest expense of $25 million to $27 million [3]. - Gogo's net leverage ratio is expected to rise to 3.6x by year-end 2024, with a plan to return to the target range of 2.5x-3.5x within one to two years [3]. Cost Synergies - The transaction is immediately accretive, achieving $18 million in annual recurring cost savings on day one, with total expected run-rate cost synergies of $25 million to $30 million over the next two years [4]. - The acquisition is anticipated to accelerate sales of Gogo's upcoming Galileo Low Earth Satellite (LEO) connectivity product through various channels, including existing customers of Satcom Direct and new installations in under-served markets [4]. Leadership Changes - Chris Moore, previously President of Satcom Direct, has been appointed as Gogo's Chief Executive Officer, succeeding Oakleigh Thorne, who transitions to Executive Chair [6][7]. - Zachary Cotner has been appointed Chief Financial Officer of the combined company, while Mike Begler takes on the role of Executive Vice President, Chief Operating Officer [7]. 2024 Guidance and Product Launches - Gogo has reiterated its standalone 2024 financial guidance, projecting total revenue between $400 million and $410 million, adjusted EBITDA between $120 million and $130 million, and free cash flow between $55 million and $65 million [10]. - The combined company is expected to generate pro forma 2024 revenue of approximately $890 million, with an adjusted EBITDA margin of around 24% and free cash flow exceeding $100 million [11]. - The launch of Gogo's small-form-factor Galileo HDX LEO service is on track for late 2024, with larger form factor services and the Gogo 5G network expected to launch in the second quarter of 2025 [12].