On Monday, September 30th, Gogo, one of the leading providers of broadband connectivity services for the private aviation industry, announced that it will acquire Satcom Direct, another global satellite communication services provider. This deal will provide Satcom Direct with approximately $375 million and five million shares of Gogo upon closing. The deal also includes up to $225 million in additional payments from Gogo to Satcom direct. This additional payment is tied directly to certain performance thresholds over the next four years.
Business aviation internet provider acquisition
This $500 million deal was initially announced on Monday, September 30th. The additional $225 million is to be paid out based on retaining and growing internet customers over the next several years. A royalty buyout will be distributed each year from 2025 to 2028, and an additional buyout will be provided based on the financial results from 2028. The acquisition was unanimously approved by the Board of Directors at Gogo. However, it remains subject to regulatory approvals and customary closing conditions. The deal is expected to close by the end of 2024.
The Chief Executive Officer (CEO) and Chairman of Gogo, Oakleigh Thorne, spoke about the acquisition. Thorne stated,
“This transaction accelerates our growth strategies of expanding our total addressable market to include the 14,000 business aircraft outside North America, and delivering solutions that meet the needs of every segment of the BA market. Together, Gogo and Satcom Direct will offer integrated GEO-LEO satellite solutions that provide the highest performance of any satellite solution, along with the world-class customer support that the global heavy jet segment demands.”
Expansion in the private aviation market and beyond
Currently, Gogo is the leading provider of business aviation internet services in the world. This includes packages of smart cabin systems that offer highly integrated connectivity, inflight entertainment, and voice solutions. These products are used on a wide variety of aircraft in the business aviation industry, including smaller turboprop aircraft to some of the largest business jets built. Gogo reported over 7,000 aircraft utilizing one of its internet systems, which includes the Gogo AVANCE L5, Gogo AVANCE L3, or narrowband satellite connectivity.
Photo: Markus Mainka | Shutterstock
Satcom Direct is also heavily involved in the business aviation industry, as it offers global geostationary satellite inflight connectivity services. However, the company sees about 80% of its revenue coming from the business aviation industry, and another 20% of its revenue coming from the military and government aviation sectors. Satcom Direct expects to reach an annual revenue of $485 million this year. This acquisition will allow Gogo to take advantage of existing Satcom Direct customers in the business aviation industry while also diversifying its revenue streams by entering the military and government mobility markets.
The President of Satcom Direct, Chris Moore, spoke about the acquisition, stating,
“Satcom Direct is thrilled to be joining forces with Gogo, a company that shares our focus on delivering outstanding service and leading innovation. Our businesses have highly complementary core competencies, and our combined financial strength and expertise unlocks opportunities to invest in new technology and deliver significant long-term value creation.”
Overall, Gogo expects this acquisition to be immediately beneficial as it can take advantage of a new combined customer base of over 12,000 global customers.