Ericsson to acquire Vonage for USD 6.2 billion to spearhead the creation of a global network and communication platform for open innovation

• Ericsson enters into agreement for USD 6.2 billion cash offer to acquire #Vonage, a global provider of cloud-based communications, with unanimous approval of the #Vonage Board of Directors
• Acquisition underlines #Ericsson strategy to expand its presence in wireless enterprise and broaden its global offerings
• Robust performance and growth prospects are built on #Vonage Communications #platform (VCP), which delivers about 80% of Vonage’s total revenues and, serves more than one million registered developers globally
• Transaction expected to be accretive to Ericsson’s EPS (excluding non-cash amortization impacts) and free cash flow before M&A from 2024 onwards
• Closing expected in the first half of 2022, subject to #Vonage shareholder approval, regulatory approvals, and other customary conditions

Ericsson (NASDAQ: ERIC) has entered into an agreement to acquire #Vonage Holdings Corp. (NASDAQ: VG) for USD 21 per share. This represents a total acquisition price of approximately USD 6.2 billion (Enterprise Value).  

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

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.”

“Today Network APIs are an established market for messaging, voice and video, but with a significant potential to capitalise on new 4G and 5G capabilities. Vonage’s strong developer ecosystem will get access to 4G and 5G network APIs, exposed in a simple and globally unified way. This will allow them to develop new innovative global offerings. Communication Service Providers will be able to better monetize their investments in network infrastructure by creating new API driven revenues. Finally, businesses will benefit from the 5G performance, impacting operational performance, and share in new value coming from applications on top of the network.”

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.”

“We believe joining Ericsson is in the best interests of our shareholders and is a testament to Vonage’s leadership position in business #cloud communications, our innovative product portfolio, and outstanding team.”

For #Ericsson, the acquisition builds on the success of the integration of Cradlepoint in September 2020. Cradlepoint has continued to develop strongly under Ericsson’s ownership.

Vonage and the #Vonage Communications #platform (VCP)

Vonage, a global provider of cloud-based communications, has a strong track record of growth and margin evolution. Sales were USD 1.4 billion in the 12-month period to 30 September 2021, and over the same period, #Vonage delivered an adjusted EBITDA margin of 14% and free cash flow of USD 109 million.

The cloud-based #Vonage Communications #platform (VCP) serves over 120,000 customers and more than one million registered developers globally. The API (Application Programming Interface) #platform within VCP allows developers to embed high quality communications - including messaging, voice and video - into applications and products, without back-end infrastructure or interfaces. #Vonage also provides Unified Communications as a Service (UCaaS) and Contact Center as a Service (CCaaS) solutions as part of the #Vonage Communications #platform.

VCP accounts for approximately 80% of Vonage’s current revenues and delivered revenue growth in excess of 20% in the three-year period to 2020, with adjusted EBITDA margins moving from -19% in 2018 to break-even in the 12-month period to 30 September 2021. Vonage’s management team projects annual growth of over 20% for VCP in the coming years.

Ericsson and #Vonage – creating a winning combination

Vonage’s presence in the #communication #platform as a Service (CPaaS) segment will provide #Ericsson with an opportunity to access a complementary, substantial and high growth segment. With increasing investments in 4G and 5G - and a flourishing ecosystem of new applications and use cases leveraging the power of modern networks - demand from enterprises for programmable networks has been accelerating. CPaaS technologies democratize network access by offering API enabled communications services. The CPaaS market is expected to reach USD 22 billion by 2025, growing at 30% annually. In addition, Ericsson’s global leadership in 5G technology is expected to provide access to the developing space for open network APIs, which is expected to reach at least USD 8 billion by the end of the decade with a strong growth profile. CSP customers will also benefit from monetizing their network investments, optimizing the user experience and stimulating additional growth opportunities with new and advanced global network APIs and access to Vonage’s unified communications and contact center solutions.

Further information in the press release to download