Ericsson’s acquisition of Cradlepoint will support the acquiring firm’s goals of capturing market share in the expanding 5G enterprise sector.
On Friday (18 September), Ericsson announced plans to acquire Cradlepoint, a US business focused on 4G and 5G enterprise solutions. The acquisition deal is worth $1.1bn.
According to Ericsson, Cradlepoint, which offers wireless edge WAN 4G technology in addition to 5G enterprise technology, will complement the acquiring firm’s existing 5G enterprise portfolio which includes dedicated networks and a global IoT platform.
Ericsson said that 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.
Commenting on the acquisition, Cradlepoint’s CEO and chair George Mulhern said: “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.”
As part of the deal, 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.
Founded in 2006, Cradlepoint has a headcount of more than 650. In addition to its headquarters, the company operates a research and development centre in Silicon Valley and has offices in the UK and Australia.
The deal, which is funded from Ericsson’s cash-in-hand, is set to be paid in full on closing. This is expected to occur in the final quarter of 2020.
Ericsson said that its operating margins are expected to be negatively impacted by approximately 1pc in 2021 and 2022 as a result of the acquisition, but that Cradlepoint is expected to contribute to operating cash flow starting in 2022.
Börje Ekholm, president and CEO of Ericsson, said: “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.”