On Monday, Gogo Inc . (NASDAQ:GOGO), a leading provider of in-flight broadband Internet service, maintained its Buy rating and a price target of $15.50 following the announcement of a definitive agreement to acquire Satcom Direct. The acquisition positions Gogo as the only in-flight connectivity provider with multi-orbit and multi-band capabilities, encompassing geostationary (GEO), low-earth orbit (LEO), and air-to-ground (ATG) technologies.
The transaction involves a purchase price of $410 million, comprising $375 million in cash and 5 million shares of Gogo's common stock. The financing for this acquisition will be through debt and available cash on Gogo's balance sheet. Satcom Direct is valued at approximately 5 times its adjusted EBITDA, or less than 8 times including earn-out provisions.
Roth/MKM highlighted the deal's immediate accretive impact on Gogo's financials, signaling a positive outlook for the company's future. The acquisition of Satcom Direct, a prominent global provider of BA geostationary satellite in-flight connectivity, is seen as a strategic move that could enhance Gogo's product offerings and market reach.
The combined entity is expected to leverage its unique position in the market to provide comprehensive global in-flight connectivity solutions. The integration of Satcom Direct's capabilities with Gogo's existing services is anticipated to offer a competitive edge in the aviation connectivity industry.
The acquisition is a significant step for Gogo, reflecting the company's commitment to expanding its services and enhancing value for its customers and shareholders alike. The transaction is subject to customary closing conditions and regulatory approvals.
In other recent news, Gogo Inc. has announced a definitive agreement to acquire Satcom Direct, positioning Gogo as the sole global in-flight connectivity provider. The merger, valued at $375 million, is expected to generate $485 million in revenue by 2024. Gogo has also committed $52.5 million to its partnership with Eutelsat OneWeb, enhancing its service offerings. The company continues to expand its connectivity, securing contracts for 25 Supplemental Type Certificates, which will extend Gogo's broadband connectivity to more business aircraft.
Gogo's second quarter 2024 financial results showed a slight 1% decrease in total revenue, amounting to $102.1 million, but a 4% increase in service revenue, reaching a record high of $81.9 million. Roth/MKM maintained its buy rating on Gogo shares.
In addition, Gogo has entered into a multi-year agreement with Airshare, providing advanced in-flight connectivity options. Despite a delay in the launch of Gogo 5G to the second quarter of 2025, Gogo Inc. has updated its 2024 financial guidance, anticipating revenue ranging from $400 million to $410 million. These are the recent developments for Gogo Inc.
InvestingPro Insights
To complement the analysis of Gogo Inc.'s (NASDAQ:GOGO) recent acquisition of Satcom Direct, InvestingPro data provides additional context on the company's financial position and market performance.
As of the latest data, Gogo's market capitalization stands at $895.01 million, with a P/E ratio of 13.71. This relatively modest valuation could be seen as attractive, especially considering the potential growth from the Satcom Direct acquisition. However, it's worth noting that Gogo's stock has experienced a significant decline, with a 24.74% drop over the past three months and a 39.31% decrease over the last year.
InvestingPro Tips highlight that Gogo's liquid assets currently exceed its short-term obligations, which could be reassuring for investors concerned about the company's ability to finance the $375 million cash portion of the acquisition. Additionally, analysts predict that the company will remain profitable this year, which aligns with the positive outlook following the acquisition announcement.
For readers interested in a deeper dive into Gogo's financials and future prospects, InvestingPro offers 7 additional tips that could provide valuable insights for investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.