(AOF) – Ericsson has reached a deal to acquire Vonage Holdings for $ 21 per share, for a total purchase price of about $ 6.2 billion in enterprise value. The telecoms equipment manufacturer offers a premium slightly above 28% compared to Friday’s closing price. The merger agreement was unanimously approved by the board of directors of the American company specializing in communication solutions for businesses via the cloud. The acquisition will be funded from Ericsson’s existing liquidity.
Vonage’s revenue was $ 1.4 billion in the 12-month period ending September 30, 2021, and over the same period, Vonage posted an Adjusted EBITDA margin of 14 % and free cash flow of $ 109 million.
The transaction is expected to provide near-term revenue synergy opportunities, including in the form of white-label and cross-selling, which is estimated to contribute $ 0.4 billion by 2025. Ericsson expects also to achieve some cost savings after the deal is closed. The transaction is expected to have a positive effect on adjusted earnings per share and free cash flow before mergers and acquisitions from 2024.
Upon completion of the transaction, Vonage will become a wholly owned subsidiary of Ericsson and continue to operate under its current name. It will be presented as a separate segment in Ericsson’s accounts.
Commenting on the acquisition, Börje Ekholm, CEO of Ericsson, said: “The core of our strategy is to build leading mobile networks through our technology leadership. 5 …) The acquisition of Vonage is the next step in achieving this strategic priority. Vonage gives us a platform to help our customers monetize network investments, for the benefit of developers and businesses. “
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