Ericsson has announced that it is acquiring Vonage for $6.2 billion after the merger agreement was unanimously approved by the Board of Vonage. Ericsson said the purchase will help it reach its goal of expanding globally in wireless enterprise.
Commenting on the deal, Rory Read, CEO of Vonage, said:
“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 should be getting good value with its purchase of Vonage as the latter firm has a strong track record of growth. In the 12-month period to September 30, Vonage recorded sales totalling $1.4 billion and an adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin of 14% and free cash flow of $109 million.
Vonage is a cloud-based communications provider and one of its offerings is the Vonage Communications Platform (VCP). It serves more than 120,000 customers and a million registered developers from around the world. The VCP API allows developers to build tools with embedded messaging, voice, and video communications.
According to Ericsson, the completion of the transaction is subject to Vonage shareholder approval, regulatory approval, and other customary conditions. The deal should be completed in the first half of 2022.