Swedish telecom equipment maker Ericsson has entered into an agreement to acquire Vonage Holdings Corp for $6.2 billion.
Börje Ekholm, President and CEO of Ericsson, says: “The core of our strategy is to build leading mobile networks through technology leadership. This provides the foundation to build an enterprise business. The acquisition of Vonage is the next step in delivering on that strategic priority.”
“Vonage gives us a platform to help our customers monetise the investments in the network, benefiting developers and businesses. Imagine putting the power and capabilities of 5G, the biggest global innovation platform, at the fingertips of developers. Then back it with Vonage’s advanced capabilities, in a world of 8 billion connected devices. Today we are making that possible,” he added.
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The cloud-based Vonage Communications Platform (VCP) serves over 120,000 customers and more than one million registered developers globally. The API (Application Programming Interface) platform within VCP allows developers to embed high-quality communications — including messaging, voice and video — into applications and products, without back-end infrastructure or interfaces. Vonage also provides Unified Communications as a Service (UCaaS) and Contact Center as a Service (CCaaS) solutions as part of the Vonage Communications Platform.
Complementary business
Vonage’s presence in the Communication Platform as a Service (CPaaS) segment will provide Ericsson with an opportunity to access a complementary, substantial and high-growth segment. With increasing investments in 4G and 5G — and a flourishing ecosystem of new applications and use cases leveraging the power of modern networks — demand from enterprises for programmable networks has been accelerating. CPaaS technologies democratise network access by offering API enabled communications services.
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In the longer term, Ericsson intends to offer value benefits to the full ecosystem — telecom operators, developers, and businesses — by creating a global platform for open network innovation, built on Ericsson and Vonage’s complementary solutions.
Subject to approvals
The acquisition will be conducted by means of a merger agreement through which Ericsson will acquire all of Vonage’s outstanding shares at an all-cash price of $21 per share. The merger consideration represents a premium of 28 per cent to Vonage’s closing share price on November 19, 2021, of $16.37 per share, and a premium of 34 per cent to the volume-weighted average share price over the 3 months to November 19, 2021, of $15.71 per share.
Completion of the transaction is subject to Vonage shareholder approval, regulatory approvals and other customary conditions and is expected within the first half of 2022.
