Ericsson to buy US cloud firm Vonage in $6.2bn deal
By Michele Maatouk
Date: Monday 22 Nov 2021
(Sharecast News) - Sweden's Ericsson has agreed to buy US cloud-based communications provider Vonage in a $6.2bn all-cash deal.
Under the terms of the acquisition, Ericsson will pay $21 per share. It said "the transaction builds upon Ericsson's stated intent to expand globally in wireless enterprise, offering existing customers an increased share of a market valued at $700bn by 2030".
Ericsson said the deal is expected to deliver near-term revenue synergy opportunities, including white-labelling and cross-selling of the combined product portfolio estimated to contribute $0.4bn by 2025. It also expects to achieve some cost efficiencies following completion of the transaction, which is set to be accretive to earnings per share and free cash flow before M&A from 2024 onwards.
The company's president and chief executive, Börje Ekholm, said: "The core of our strategy is to build leading mobile networks through technology leadership. This provides the foundation to build an enterprise business. The acquisition of Vonage is the next step in delivering on that strategic priority. Vonage gives us a platform to help our customers monetize the investments in the network, benefitting developers and businesses.
"Imagine putting the power and capabilities of 5G, the biggest global innovation platform, at the fingertips of developers. Then back it with Vonage's advanced capabilities, in a world of 8 billion connected devices. Today we are making that possible."
Vonage shares surged on the news and by 1100 GMT were trading up 28% in pre-market trade at $20.95.
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