Ericsson on Monday agreed to buy cloud communications firm Vonage in a $6.2 billion all-cash deal, as the telecom gear maker moves to broaden its 5G portfolio.
The deal, one of the largest in Ericsson's history, follows its $1.1 billion purchase of Cradlepoint last year which gave it access to tools that can connect devices using the so-called Internet of Things over a 4G or 5G network.
Ericsson will pay $21 for each outstanding Vonage share, a 28% premium to Friday's closing price and a 34% premium to the average of the last 3 months, a price analysts said was high. Vonage, which operates across sectors such as healthcare, finance, education and transportation, had sales of $1.4 billion in the 12-month period to Sept. 30, 2021, with a margin on adjusted earnings before interest, tax and depreciation of 14% and free cash flow of $109 million."That's where magic happens when developers use the Vonage platform to create applications for various enterprises," Mellander said.
Ericsson had branched out into multi-media in the early 2000s but struggled to fit its purchases into its operations, weighing on margins and profits.
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