The Swedish telecommunications company Ericsson has confirmed the purchase of the US company Vonage Holdings Corp. It is a company dedicated to offering cloud-based communications services. Ericsson will pay $ 21 in cash for each of its shares, representing a total cost of the operation of about $ 6.2 billion. It is 28% more than the valuation of the company based on the company’s share price at the close of the session on November 19, when they were at $ 16.37.
If all goes according to plan, Ericsson expects to be able to close the purchase transaction during the first half of next year 2022. With this purchase, the Swedish company hopes to achieve short-term revenue synergy opportunities. Among these opportunities is the creation of private labels and the joint sale of the combined midwife of products, which is estimated to generate $ 400 million in revenue by 2025 to Ericsson. In addition, the company expects to achieve some cost savings once the transaction closes.
When this occurs, Vonage will become a wholly owned subsidiary of Ericsson. Of course, it will continue to work with its current name. In the communication of the results of the company it will have an independent section, the same as in its accounting.
Vonage is currently based in the United States, in Holmdel, NJ. It has 2,200 employees spread across the United States, EMEA and Asia-Pacific. Vonage employees will continue to work for her once it becomes a subsidiary of Ericsson, and its CEO, Rory Read, will join the company’s leadership team and report its operations to the CEricsson EO, Börje Ekholm.
Regarding the operation, Ekholm stressed that «the core of our strategy is to develop leading mobile networks through technology leadership. This lays the foundation for the development of an enterprise business. The Vonage purchase is the next step in this strategic priority. Vonage provides us with a platform to help our customers monetize network investments, benefiting developers and businesses. Imagine putting the power and capabilities of 5G, the largest global innovation platform, in the hands of developers. And then back it up with Vonage’s advanced capabilities, in a world with 8 billion connected devices. Today we make it possible«.