Ericsson to acquire Vonage for $6.2 billion

Ericsson has said it has entered into an agreement to buy cloud-based communications provider Vonage for $6.2 billion (£4.6 billion) in cash.

Ericsson is set to pay $21 (£15.62) for each outstanding Vonage share in what is considered the Swedish telecom giant’s largest disclosed acquisition to date, as it continues to expand its product portfolio.

The deal is expected to be finalised in the first half of 2022, and has received unanimous approval across Vonage’s board. Vonage is expected to continue to operate under its existing name as a wholly-owned subsidiary of Ericsson.

Börje Ekholm, president and CEO of Ericsson, said that Vonage will provide a platform to assist Ericsson’s business customers in monetising network investments. Meanwhile, the New Jersey-based company’s more than one million registered developers will receive access to 4G and 5G network APIs, allowing it 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.” he said in a company announcement.

Founded in 2001, Vonage employs more than 2,000 employees throughout the US, Europe and Asia. The company serves over 100,000 businesses worldwide across sectors such as healthcare, finance, education and transportation.

Commenting on the acquisition, Vonage CEO Rory Read said that both companies “have a shared ambition to accelerate [their] 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,” he added.

The news comes a year after Ericsson announced the acquisition of WAN 4G and 5G solutions provider Cradlepoint for an enterprise value of $1.1 billion (£850 million). The company is a fully-owned subsidiary of Ericsson, yet has retained its original employees and continues to operate from its Idaho headquarters under its existing brand.