Gogo buys competitor Satcom Direct

Gogo, which provides internet access for business jets, has now purchased its main competitor Satcom Direct, in order to provide a service that can better compete with Starlink.

Satcom Direct would get $375 million in cash and five million shares from Gogo under a deal announced Sept. 30, subject to regulatory approvals, and up to $225 million in extra payments tied to performance targets over the next four years, suggesting around $636 million in maximum total proceeds.

Gogo has historically dominated the small and midsize part of the business aviation market and connects about 7,000 planes, according to William Blair analyst Louie DiPalma, while Satcom Direct has a commanding market share for long-haul.

Combined, William Blair estimates the companies are providing Wi-Fi to around 8,200 of the 9,200 business jets that currently have connectivity — or nearly 90% of the market.

Gogo’s share price has dropped 70% since 2022 in the face of Starlink’s recent signing of numerous airline companies. The stock market obviously thinks Starlink is eventually going to capture the business jet customer as well. This deal will possibly allow Gogo to compete more effectively.