· Ericsson acquires the
market-leader for Wireless Edge WAN solutions for an enterprise value of USD
1.1 b.
· Acquisition complements
Ericsson’s enterprise offerings and creates valuable new revenue streams for
customers
· Transaction expected to
close during Q4 2020, subject to merger clearance and other closing conditions
Ericsson (NASDAQ: ERIC)
has agreed to acquire Cradlepoint, the US-based market leader in Wireless Edge
WAN 4G and 5G Enterprise solutions. The investment is key to Ericsson’s ongoing
strategy of capturing market share in the rapidly expanding 5G
The combined offering
will create valuable new revenue streams for customers by supporting full
5G-enabled services for enterprise, and boost returns on investments in the
network.
Cradlepoint will become a
fully owned subsidiary of Ericsson while continuing to operate under its
existing brand. Cradlepoint employees will remain within the company,
headquartered in
The acquisition price
amounts to an enterprise value of USD 1.1 b. with the transaction expected to
close before the end of Q4 2020, subject to closing conditions. The purchase
price, which is funded from Ericsson’s cash-in-hand, is paid in full on
closing. Cradlepoint’s sales for 2019 were SEK 1.2 b. with a gross margin of
61%. Ericsson’s operating margins are expected to be negatively impacted by
approximately 1% in 2021 and 2022 - where half is related to amortization of
intangible assets which arise from the acquisition. Cradlepoint is expected to
contribute to operating cash-flow starting in 2022. Ericsson’s 2022 group
financial targets remain unchanged.
Wireless wide area
network (wireless WAN) Edge solutions connect through 4G and 5G to deliver
fast, secure, and flexible connectivity wherever and whenever it is needed for
businesses, mobility and critical frontline emergency services. Cradlepoint is
strongly positioned in a market with underlying growth of 25-30%.
Börje Ekholm, President
and CEO Ericsson, says: "Portfolio-near acquisitions are an integral part
of our earlier communicated strategy. The acquisition of Cradlepoint
complements our existing offerings and is key to our strategy of helping
customers grow the value of their 5G network investments. Ericsson is uniquely
positioned to build on Cradlepoint’s leadership position in Wireless Edge and
the wireless WAN market. Combining the scale of our market access and
established relationships with the world’s biggest mobile operators we are
making a strong investment to support our customers to grow in this exciting
market. I would like to extend a very warm welcome to all Cradlepoint
employees.”
George Mulhern, CEO and
Chairman, Cradlepoint says: “We have led the way in bringing the power of
cellular networks and technologies to enterprise and public sector customers –
helping them connect beyond the limits of traditional wired WANs. Ericsson with
its global 5G leadership is a great match for us and I am very excited to
continue to scale and expand our business together.”
Founded in 2006,
Cradlepoint has more than 650 employees, providing wireless WAN solutions that
deliver enterprise-grade connectivity. In addition to the company headquarters
in
Cradlepoint’s
subscription model combines cloud-delivered software with hardware endpoints,
support and training.
Ericsson’s long-standing
collaboration with Cradlepoint dates back to the launch of 4G in the