Ericsson plans to buy Vonage for $ 6.2 billion

Ericsson headquarters in Stockholm

Along with Nokia, Ericsson is one of the two leading European network equipment providers.

(Photo: Reuters)

Dusseldorf The Swedish network supplier Ericsson wants to take over the US provider of cloud-based telephony, Vonage, for 6.2 billion dollars. Both companies announced this on Monday. Ericsson plans to offer $ 21 per Vonage share. Including debt, Vonage is valued at 6.2 billion US dollars (5.5 billion euros).

The takeover is expected in the first half of 2022. Both Vonage shareholders and regulators have yet to approve the deal. For Ericsson the takeover would be the largest in the company’s history, reported the financial agency Bloomberg.

Ericsson CEO Börje Ekholm said: “Vonage offers us a platform with which we can help our customers monetize their investments in the network, which benefits developers and companies.” To deliver telecommunication networks. Ericsson manufactures equipment for 5G cellular networks, among other things. On the stock exchange, Ericsson shares fell by more than four percent in early trading on Monday.

According to Ekholm’s will, Ericsson should also benefit more from the entire added value with mobile communications services. This is exactly the goal the company is pursuing with the acquisition of Vonage. Founded in 2001 in Holmdel Township in New Jersey, the company offers cloud-based telephony. Customers include larger companies and call centers. The Vonage platform has 120,000 customers.

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Ericsson described the strategy behind the acquisition as follows: “In the longer term, Ericsson aims to benefit the entire ecosystem – telecom operators, developers and businesses – by creating a global platform for open network innovation that builds on complementary solutions from Ericsson and Vonage.”

Vonage board of directors approves takeover

Rory Read, CEO of Vonage, said: “Ericsson and Vonage have the common goal of accelerating our long-term growth strategy.” According to the company, the Vonage board of directors has already spoken out in favor of the takeover.

The takeover offer represents a premium of 28 percent on the closing price of Vonage shares on November 19 of $ 16.37 per share and a premium of 34 percent on the volume-weighted average share price for the three months ended November 19 of November 15 , $ 71 a share.

Börje Ekholm

The Ericsson CEO is planning the largest takeover in the company’s history.

(Photo: via REUTERS)

The acquisition will be financed by Ericsson’s existing cash position, which at the end of the third quarter amounted to SEK 88 billion gross (approximately EUR 8.7 billion) and SEK 56 billion net (approximately EUR 5.5 billion).

Along with Nokia, Ericsson is one of the two leading European network equipment providers, the main competitors being Huawei and ZTE from China. Since 2019 there have been considerable reservations in Europe against Chinese network equipment providers. Sweden, among others, had excluded Huawei from expanding the 5G network with reference to security concerns.

Ericsson and Nokia had benefited from reservations against Chinese competitors in Europe. In return, their business in China came under pressure. When it came to awarding 5G contracts, Ericsson and Nokia had less of a chance. China is considered to be the world’s largest mobile communications market.

More: Simple, low-energy, safe – a new 5G standard is opening up a new era in Europe’s industry.

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