The Swedish manufacturer of telecommunications networks and equipment Ericsson has reached an agreement to acquire the cloud communications firm for about $ 6.2 billion in cash Vonage Holdings, as reported by the Scandinavian company.
The transaction, which will be completed in the first half of 2022 at the expense of receiving authorizations from the shareholders of Vonage and regulators, will be carried out through a merger agreement through which Ericsson will acquire all outstanding shares of Vonage at a cash price of $ 21 dollars, which represents a premium of 28% over the closing price of the US shares last Friday.
Ericsson will finance the acquisition of Vonage Holdings with existing cash resources, which amounted to SEK 88 billion as of September 30, 2021 in gross terms, and SEK 56 billion in net value.
The transaction is expected to provide the opportunity to achieve short-term revenue synergies, including $ 400 million from cross-selling the product portfolio by 2025, in addition to achieving some cost efficiencies upon completion of the transaction.
After the closing of the operation, Vonage will become a subsidiary of Ericsson and it will continue to operate under its current name. Vonage’s approximately 2,200 employees will remain with the company and Vonage’s CEO, Rory Read, will join Ericsson’s executive team, reporting to the CEO of the Swedish company, Börje Ekholm.
“The core of our strategy is to build leading mobile networks through technology leadership. This provides the foundation for building an entrepreneurial business. The Vonage acquisition is the next step in meeting that strategic priority, ”stated Ericsson’s President and CEO, Börje Ekholm, Purchaser Provides Ericsson with a platform to help customers monetize network investments, benefiting developers and businesses.
“We believe that joining Ericsson is in the best interest of our shareholders and is a testament to Vonage’s leadership position in cloud business communications, our innovative product portfolio and our outstanding team.”
On your side, Rory Read, CEO of Vonage, stated that the merger with Ericsson is in the best interest of the company’s shareholders and attests to Vonage’s leadership position in business communications in the cloud.