Ericsson to purchase cloud agency Vonage for $6.2 billion

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STOCKHOLM (Reuters) -Cellular telecoms tools maker Ericsson stated on Monday it had agreed to purchase cloud communications agency Vonage for $6.2 billion.

The deal was the Swedish agency’s largest in years and follows its acquisition of U.S.-based wi-fi networking firm Cradlepoint for $1.1 billion in 2020.

“The merger settlement was permitted unanimously by the Board of Vonage,” Ericsson stated in an announcement.

“The transaction builds upon Ericsson’s acknowledged intent to increase globally in wi-fi enterprise, providing present clients an elevated share of a market valued at $700 billion by 2030.”

Vonage had gross sales of $1.4 billion within the 12-month interval to Sept. 30 2021, with a margin on adjusted earnings earlier than curiosity, tax and depreciation (EBITDA) of 14% and free money move of $109 million.

The acquisition marks a brand new part after a interval since Borje Ekholm took over as CEO in 2017.

He has targeted on restructuring and refocusing the enterprise after Ericsson branched out into multi-media within the early a part of the 2000s. It struggled to suit its purchases into its operations, weighing on margins and earnings.

The cloud-based Vonage Communications Platform serves greater than 120,000 clients and multiple million registered builders globally.

Ericsson stated it anticipated the deal to spice up earnings per share – excluding non-cash amortization impacts – and free money move from 2024 onwards.

The deal is predicted to shut within the first half of 2022, topic to Vonage shareholder approval, regulatory approvals, and different situations.

(Reporting by Simon Johnson, Modifying by Louise Heavens)



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