Mobile telecommunication equipment maker Ericsson (NASDAQ:ERIC) is buying cloud communications firm Vonage for $6.2 billion U.S.
The deal is the Swedish firm’s biggest in years and follows its acquisition of U.S.-based wireless networking company Cradlepoint for $1.1 billion U.S. in 2020. The acquisition has been unanimously approved by Vonage’s Board of Directors, the companies said in a news release.
Vonage had sales of $1.4 billion U.S. in the 12-month period to September 30, 2021, with a margin on adjusted earnings of 14% and free cash flow of $109 million U.S.
Ericsson has focused on restructuring and refocusing its business after branching out into multi-media in the early part of the 2000s. The company has struggled in recent years to fit its purchases into its operations, weighing on margins and profits.
Vonage’s cloud-based 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 and free cash flow from 2024 onwards. The deal is expected to close in the first half of 2022, subject to Vonage shareholder approval and regulatory approvals.
