Ericsson to buy cloud firm Vonage for US$6.2bn

Mobile telecoms equipment maker Ericsson announced on Monday it had reached an agreement for the acquisition of cloud communications firm Vonage. The deal, which is valued at US$6.2 billion, is said to be the Swedish company’s largest in years and follows its acquisition of US-headquartered wireless networking company Cradlepoint for US$1.1 billion in 2020.

In its statement, Ericsson said: “The merger agreement was approved unanimously by the Board of Vonage. 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 $700 billion by 2030.”

Vonage recorded sales worth about US$1.4 billion in the 12-month period which ended Sept. 30, 2021, with a margin on adjusted earnings before interest, tax, and depreciation of 14 percent and free cash flow of US$109 million. The firm has described this deal as marking a new phase since Borje Ekholm took the reins as CEO in 2017.

He has made it a core mission to restructure and refocus the business after Ericsson branched out into multi-media in the early part of the 2000s.

Ericsson noted that the deal is expected to boost earnings per share – excluding non-cash amortization impacts – and free cash flow from 2024 onwards. The deal is on course to close in the first half of 2022, subject to Vonage shareholder approval, regulatory approvals, and related hurdles.