Ericsson logo is seen at its headquarters in Stockholm, Sweden June 14, 2018. REUTERS/Olof Swahnberg/File Photo

STOCKHOLM, Nov 22 (Reuters) – Mobile telecoms equipment maker Ericsson (ERICb.ST) said on Monday it had agreed to buy cloud communications firm Vonage for $6.2 billion.

The deal was the Swedish firm’s biggest in years and follows its acquisition of U.S.-based wireless networking company Cradlepoint for $1.1 billion in 2020.

“The merger agreement was approved unanimously by the Board of Vonage,” Ericsson said in a statement.

“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 had sales of $1.4 billion in the 12-month period to Sept. 30 2021, with a margin on adjusted earnings before interest, tax and depreciation (EBITDA) of 14% and free cash flow of $109 million.

The acquisition marks a new phase after a period since Borje Ekholm took over as CEO in 2017.

He has focused on restructuring and refocusing the business after Ericsson branched out into multi-media in the early part of the 2000s. It struggled to fit its purchases into its operations, weighing on margins and profits.

The cloud-based Vonage Communications Platform serves more than 120,000 customers and more than one million registered developers globally.

Ericsson said it expected the deal to boost earnings per share – excluding non-cash amortization impacts – and free cash flow from 2024 onwards.

The deal is expected to close in the first half of 2022, subject to Vonage shareholder approval, regulatory approvals, and other conditions.

Source: https://www.reuters.com/business/media-telecom/ericsson-buy-cloud-firm-vonage-62-bln-2021-11-22/

You May Also Like

Rethinking work-from-home after COVID-19

By Paul Vandenberg The implications of working from home on costs, productivity, and…

Clariant agrees to sell pigments business in $950 mln deal

Clariant (CLN.S) has agreed to sell its pigments business to Heubach Group and SK Capital Partners in a deal which values the business at up to 855 million Swiss francs ($951.27 million), the Swiss chemicals maker said on Monday.

EXCLUSIVE U.S. investigators question Goodyear Malaysia workers over labour practices

U.S. government investigators have interviewed workers at Goodyear Tire & Rubber Co’s (GT.O) Malaysian factory about their working conditions, employees told Reuters, intensifying scrutiny of potential labour abuses by the tyre maker in the country.