Telefonaktiebolaget L M Ericsson agreed to acquire Vonage Holdings Corp. for $6.2 billion. The purchase price values Vonage at $21 per share, implying a 28 percent premium to Nov. 19 closing price. Vonage is a cloud-based communications provider based in Holmdel, New Jersey, with 2,200 employees throughout the United States, EMEA, and APAC.
The transaction builds upon Ericsson’s aim to expand globally in the wireless enterprise, offering existing customers an increased share of a market valued at $700 billion by 2030.
Ericsson held net cash of SEK 55.7 billion (about $6.23 billion) as of September 30.
The transaction will likely deliver near-term revenue synergy opportunities estimated to contribute $0.4 billion by 2025.
The transaction will likely be accretive to EPS and free cash flow before M&A from 2024 onwards.
Vonage will become a wholly-owned subsidiary of Ericsson and will continue to operate under its current name. Ericsson expects to complete the deal within the first half of 2022.
Vonage’s employees will remain with the company, and the Vonage CEO Rory Read will join the Executive Team of Ericsson, reporting to CEO Börje Ekholm.
Ericsson also stated it remains fully committed to previously communicated financial targets.
ERIC shares traded lower by 3.94 percent at $10.49 in the premarket session on the last check Monday.
By Anusuya Lahiri
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