Gogo Inc. (GOGO), a provider of inflight connectivity and entertainment solutions, Monday said it has agreed to acquire Satcom Direct in a cash and stock transaction.
As per the deal, Satcom Direct will receive $375 million in cash and 5 million shares of Gogo stock, and also can earn up to additional $225 million on reaching certain performance thresholds over the next four years.
Satcom Direct, a business aviation geostationary satellite in-flight connectivity service provider, is expected to generate revenue of about $485 million in 2024.
"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," said Oakleigh Thorne, Gogo Chairman and CEO. "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."
Gogo plans to finance the transaction with a combination of cash-on-hand and $275 million in new debt. Gogo expects net leverage to be in the 4x range post-closing and anticipates returning to its target net leverage range of 2.5-3.5x two years post-closing.
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