Swedish Ericsson buys American cloud operator Vonage
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Stockholm (AFP) – Ericsson announced on Monday that it is acquiring the American cloud-based communications provider Vonage, in the Swedish company’s largest acquisition in recent times as it broadens its operations beyond its traditional telecommunications equipment operations.
The $ 6.2 billion deal (5.5 billion euros) is part of Ericsson’s strategy to expand its presence in wireless companies and broaden its global offering, the company said.
The offer was unanimously approved by Vonage’s board, it said.
Ericsson is one of the world’s largest manufacturers of telecom equipment and is fighting against China’s Huawei and Finnish Nokia in areas such as 5G networks.
At $ 21 per share, the offer represents a premium of 28 percent above Vonage’s closing price on the technology-heavy Nasdaq stock exchange on Friday.
Vonage was founded in 2001 and offers IP voice telephony and has in recent years developed a cloud-based communication platform.
The company has 120,000 customers, giving one million developers access to its API interface, which accounts for 80 percent of its $ 1.4 billion annual sales.
The company has seen growth of around 20 percent per year over the past three years.
Based in New Jersey, Vonage has 2,000 employees in North America, Europe and Asia.
Its platform handles 25 billion minutes and messages per year, according to its website.
Ericsson said that Vonage will continue to operate under its own name as a wholly owned subsidiary.
The market for so-called “Communication Platform as a Service” (CPaaS), which combines voice, messaging and video, is expected to reach $ 22 billion by 2025 with an annual growth of 30 percent, according to Ericsson.
The Swedish Group will finance the acquisition with its existing cash resources, which amounted to SEK 56 billion (USD 6.2 billion, EUR 5.6 billion) at the end of September.
It is hoped to be able to complete the acquisition during the first half of 2022.
Ericsson’s share fell by 3.5 percent in early morning trading on the Stockholm Stock Exchange.
Last year, Ericsson bought another US company, Cradlepoint, which specializes in wireless WAN solutions for businesses, for $ 1.1 billion.
© 2021 AFP