According to a recent announcement, Ericsson has agreed to acquire Cradlepoint, the US-based Wireless Edge WAN 4G and 5G Enterprise solutions provider. The investment reportedly is key to Ericsson’s ongoing strategy of capturing market share in the rapidly expanding 5G Enterprise space. Cradlepoint complements Ericsson’s existing 5G Enterprise portfolio which includes Dedicated Networks and a global IoT platform.
The combined offering will create new revenue streams for customers by supporting full 5G-enabled services for enterprise, and boost returns on investments in the network.
The announcement says that 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 Boise, Idaho. It will be part of Ericsson’s Business Area Technologies & New Businesses.
The acquisition price amounts to an enterprise value of $1.1 billion with the transaction reportedly 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. 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.
“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,” said Börje Ekholm, President and CEO Ericsson. “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.”
“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,” said George Mulhern, CEO and Chairman, Cradlepoint. “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.”
Ken Briodagh is a storyteller, writer and editor with about two decades of experience under his belt. He is in love with technology and if he had his druthers would beta test everything from shoe phones to flying cars.
Edited by Ken Briodagh