Ericsson to acquire cloud firm Vonage for USD 6.2 billion

Telecommunications firm Ericsson on Monday announced to acquire global cloud based communications provider Vonage for $6.2 billion to begin the creation of a worldwide network and communication platform for open innovation. 

The acquisition indicates Ericsson’s strategy to grow its presence in the wireless enterprise and widen its global offerings. The cloud based Vonage Communications Platform accounts for nearly 80 percent of Vonage’s current revenues, serves over 1,20,000 clients and more than one million registered developers globally. 

The merger deal was approved unanimously by the Board of Vonage. The agreement builds upon Ericsson’s stated intent to expand globally in the wireless enterprise, offering existing customers an enhanced share of a market valued at USD 700 billion by 2030. 

Ericsson will acquire all of Vonage’s outstanding shares at an all-cash price of USD 21 per share. The merger consideration represents a premium of 28% to Vonage’s closing share price on 19 November 2021 of USD 16.37 per share, and a premium of 34% to the volume-weighted average share price over the 3 months to 19 November 2021 of USD 15.71 per share. 

The merger transaction is expected to be complete in the first half of 2022, the company said in a statement subject to Vonage shareholder approval, regulatory approvals, and other customary conditions.

Börje Ekholm, President and CEO of Ericsson, says: “The core of our strategy is to build leading mobile networks through technology leadership. This provides the foundation to build an enterprise business. The acquisition of Vonage is the next step in delivering on that strategic priority. Vonage gives us a platform to help our customers monetize the investments in the network, benefitting developers and businesses. Imagine putting the power and capabilities of 5G, the biggest global innovation platform, at the fingertips of developers. Then back it with Vonage’s advanced capabilities, in a world of 8 billion connected devices. Today we are making that possible.”

Rory Read, CEO of Vonage, says: “Ericsson and Vonage have a shared ambition to accelerate our long-term growth strategy. The convergence of the internet, mobility, the cloud and powerful 5G networks are forming the digital transformation and intelligent communications wave, which is driving a secular change in the way businesses operate. The combination of our two companies offers exciting opportunities for customers, partners, developers and team members to capture this next wave.” 

Ericsson and Vonage – building a winning combination 

Vonage’s presence in the Communication Platform as a Service (CPaaS) segment will allow Ericsson to access a complimentary, substantial, and high-growth segment. With increasing investments in 4G and 5G – and a growing ecosystem of new applications and use cases leveraging the power of modern networks – demand from enterprises for programmable networks has been expediting. 

The combination of Vonage’s customer base and developer community and Ericsson’s deep network expertise, 26,000 R&D specialists, and global reach create opportunities to accelerate standalone strategies and innovation in the market. This includes accelerating enterprise digitalization and developing advanced APIs made possible by 5G; putting the power of the wireless network and communications at the fingertips of the developer. 

In the longer term, Ericsson aims to offer valuable benefits to the full ecosystem – telecom operators, developers, and businesses – by creating a global platform for open network innovation, built on Ericsson and Vonage’s complementary solutions. 

Source: Press Release