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• Ericsson's acquisition underscores the company's goal to increase its position in the wireless enterprise.
• The transaction is anticipated to close in the first part of 2022
Ericsson has agreed to buy Vonage Holdings Corp that amounts to the total acquisition cost of around $6.2 billion.
The deal extends on Ericsson's declared ambition to expand worldwide in the wireless enterprise, providing existing clients with a larger portion of a market worth $700 billion by 2030.
The merger agreement was approved unanimously by the Board of Vonage, the Swedish company said in a statement.
“Vonage gives us a platform to help our customers monetize the investments in the network, benefitting developers and businesses,” said Börje Ekholm, President, and CEO of Ericsson, in a statement. “Imagine putting the power and capabilities of 5G, the biggest global innovation platform, at the fingertips of developers.”
Vonage, a global supplier of cloud-based communications sales were $1.4 billion in the fiscal year ending September 30, 2021, with an adjusted EBITDA margin of 14% and free cash flow of $109 million.
Summary of Transaction
The transaction will be carried out through a merger agreement in which Ericsson would buy all of Vonage's existing shares for an all-cash consideration of $ 21 per share.
The acquisition will be financed with Ericsson's current cash resources, which totaled SEK 88 billion on a gross basis and SEK 56 billion on a net basis as of 30 September 2021.
On the completion of the transaction, Vonage will become a fully owned subsidiary of Ericsson and will continue to operate under its current brand.
The company headquarters in Holmdel, New Jersey Vonage staff will be retained, and CEO Rory Read will join Ericsson's Executive Team, reporting to CEO Börje Ekholm.
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“We believe joining Ericsson is in the best interests of our shareholders and is a testament to Vonage’s leadership position in business cloud communications, our innovative product portfolio, and outstanding team,” Rory Read, CEO of Vonage, said, in a statement.
The transaction is scheduled to close in the first half of 2022.
A strong amalgamation
Vonage's position in the Communication Platform as a Service (CPaaS) area will provide Ericsson access to a complementary, large, and rapidly growing market.
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In addition, the combination of Vonage's customer base and developer community, as well as Ericsson's deep network experience, 26,000 R&D professionals, and worldwide reach, creates chances to drive independent strategy and market innovation.
Picture Credits: Ericsson