STOCKHOLM, Nov. 22, 2021 /PRNewswire/ -- Ericsson (NASDAQ:
ERIC) has entered into an agreement to acquire Vonage Holdings
Corp. (NASDAQ: VG) for USD 21 per
share. This represents a total acquisition price of approximately
USD 6.2 billion (Enterprise Value).
The merger agreement was approved unanimously by the Board of
Vonage. The transaction builds upon Ericsson's stated intent to
expand globally in wireless enterprise, offering existing customers
an increased share of a market valued at USD
700 billion by 2030.
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 monetize the investments in the network, benefitting
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."
"Today Network APIs are an established market for messaging,
voice and video, but with a significant potential to capitalise on
new 4G and 5G capabilities. Vonage's strong developer ecosystem
will get access to 4G and 5G network APIs, exposed in a simple and
globally unified way. This will allow them to develop new
innovative global offerings. Communication Service Providers will
be able to better monetize their investments in network
infrastructure by creating new API driven revenues. Finally,
businesses will benefit from the 5G performance, impacting
operational performance, and share in new value coming from
applications on top of the network."
Rory Read, CEO of Vonage, says:
"Ericsson and Vonage have a shared ambition to accelerate our
long-term growth strategy. The convergence of the internet,
mobility, the cloud and powerful 5G networks are forming the
digital transformation and intelligent communications wave, which
is driving a secular change in the way businesses operate. The
combination of our two companies offers exciting opportunities for
customers, partners, developers and team members to capture this
next wave."
"We believe joining Ericsson is in the best interests of our
shareholders and is a testament to Vonage's leadership position in
business cloud communications, our innovative product portfolio,
and outstanding team."
For Ericsson, the acquisition builds on the success of the
integration of Cradlepoint in September
2020. Cradlepoint has continued to develop strongly under
Ericsson's ownership.
Vonage and the Vonage Communications Platform (VCP)
Vonage, a global provider of cloud-based communications, has a
strong track record of growth and margin evolution. Sales were
USD 1.4 billion in the 12-month
period to 30 September 2021, and over
the same period, Vonage delivered an adjusted EBITDA margin of 14%
and free cash flow of USD 109
million.
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.
VCP accounts for approximately 80% of Vonage's current revenues
and delivered revenue growth in excess of 20% in the three-year
period to 2020, with adjusted EBITDA margins moving from -19% in
2018 to break-even in the 12-month period to 30 September 2021. Vonage's management team
projects annual growth of over 20% for VCP in the coming years.
Ericsson and Vonage - creating a winning combination
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 democratize network access by
offering API enabled communications services. The CPaaS market is
expected to reach USD 22 billion by
2025, growing at 30% annually. In addition, Ericsson's global
leadership in 5G technology is expected to provide access to the
developing space for open network APIs, which is expected to reach
at least USD 8 billion by the end of
the decade with a strong growth profile. CSP customers will also
benefit from monetizing their network investments, optimizing the
user experience and stimulating additional growth opportunities
with new and advanced global network APIs and access to Vonage's
unified communications and contact center solutions.
The combination of Vonage's customer base and developer
community and Ericsson's deep network expertise, 26,000 R&D
specialists and global reach create opportunities to accelerate
standalone strategies and innovation in the market. This includes
accelerating enterprise digitalization and developing advanced APIs
made possible by 5G; putting the power of the wireless network and
communications at the finger-tips of the developer. Such APIs can
be applied to help ensure the quality of critical services like
telemedicine, immersive virtual education and autonomous vehicles
as well as experiential performance benefits in gaming, augmented
and extended reality, over wireless.
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.
Overview of the transaction
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 USD 21
per share. The merger consideration represents a premium of 28% to
Vonage's closing share price on 19 November
2021 of USD 16.37 per share,
and a premium of 34% to the volume-weighted average share price
over the 3 months to 19 November 2021
of USD 15.71 per share.
The acquisition will be financed through Ericsson's existing
cash resources, which amounted to SEK 88
billion as of 30 September
2021 on a gross basis, and SEK 56
billion on a net basis as of the same date.
The transaction is expected to deliver near-term revenue synergy
opportunities, including white-labelling and cross-selling of the
combined product portfolio estimated to contribute USD 0.4 billion. by 2025. Ericsson also expects
to achieve some cost efficiencies following completion of the
transaction.
The transaction is expected to be accretive to EPS (excluding
non-cash amortization impacts) and free cash flow before M&A
from 2024 onwards.
On completion, Vonage will become a wholly owned subsidiary of
Ericsson and will continue to operate under its existing name. It
will be reported as a separate segment in Ericsson accounts. Vonage
is headquartered in Holmdel, New
Jersey in the United States
with 2,200 employees throughout the
United States, EMEA and APAC. Vonage's employees will remain
with the company and the Vonage CEO Rory
Read will join the Executive Team of Ericsson, reporting to
CEO, Börje Ekholm. Read joined Vonage as CEO in July 2020. With more than three decades' global
technology industry experience, Read was previously Chief Operating
Executive for Dell Technologies and before that, CEO of Advanced
Micro Devices (AMD).
Ericsson remains fully committed to previously communicated
financial targets, including long-term EBITA margins of 15-18%;
long term FCF before M&A of 9-12% of sales; and a 2022 target
EBIT margin of 12-14% for Ericsson Group excluding
Vonage.
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.
INVITATION TO MEDIA AND ANALYST CALL
The company will hold two conference calls for journalists,
financial analysts, and investors. Börje Ekholm, President and CEO
and Carl Mellander, Chief Financial
Officer will make brief comments and take questions.
Conference call 9:10 AM CET
The first conference call will begin November 22, at 9:10 AM
CET (8:10 AM GMT in
London and 3:10 AM EST in New
York).
Join the audio webcast or please go to
www.ericsson.com/investors
To ask a question, please call:
Sweden: +46 (0)8 566 426 51
(Toll-free Sweden: 0200 883
685)
International/UK: +44 (0)333 300 0804 (Toll-free UK: 0800 358
9473)
US: +1 631 913 1422 (Toll-free US: +1 855 85 70686)
PIN code: 89920727#
Please call in at least 15 minutes before the briefing
starts.
The webcast will be available on-demand after the event and can
be viewed on our website.
Conference call 3:30 PM CET
The second conference call will begin November 22, at 3:30 PM
CET (2:30 PM GMT in
London and 9:30 AM EST in New
York).
Join the audio webcast or please go to
www.ericsson.com/investors
To ask a question, please call:
Sweden: +46 (0)8 566 426 51
(Toll-free Sweden: 0200 883
685)
International/UK: +44 (0)333 300 0804 (Toll-free UK: 0800 358
9473)
US: +1 631 913 1422 (Toll-free US: +1 855 85 70686)
PIN code: 26077162#
Please call in at least 15 minutes before the briefing
starts.
The webcast will be available on-demand after the event and can
be viewed on our website.
NOTES TO EDITORS:
FOLLOW US:
Subscribe to Ericsson press releases here.
Subscribe to the Ericsson Blog here.
https://www.twitter.com/ericsson
https://www.facebook.com/ericsson
https://www.linkedin.com/company/ericsson
FOR FURTHER INFORMATION, PLEASE CONTACT:
Contact person
Peter Nyquist, Head of Investor
Relations
Phone: +46 705 75 29 06
E-mail: peter.nyquist@ericsson.com
Investors
Stefan Jelvin, Director, Investor Relations
Phone: +46 709 86 02 27
E-mail: stefan.jelvin@ericsson.com
Lena Häggblom, Director, Investor Relations
Phone: +46 72 593 27 78
E-mail: lena.haggblom@ericsson.com
Global Press Office
Phone: +46 10 719 69 92
E-mail: media.relations@ericsson.com
About Ericsson
Ericsson enables communications service providers to capture the
full value of connectivity. The company's portfolio spans Networks,
Digital Services, Managed Services, and Emerging Business and is
designed to help our customers go digital, increase efficiency and
find new revenue streams. Ericsson's investments in innovation have
delivered the benefits of telephony and mobile broadband to
billions of people around the world. The Ericsson stock is listed
on Nasdaq Stockholm and on Nasdaq New York. www.ericsson.com
Forward-looking statements
This release includes forward-looking statements, including
statements reflecting management's current views relating to the
growth of the market, future market conditions, future events,
financial condition, and expected operational and financial
performance, including, in particular the following:
- Our goals, strategies, planning assumptions and operational or
financial performance expectations
- Industry trends, future characteristics and development of the
markets in which we operate
- Our future liquidity, capital resources, capital expenditures,
cost savings and profitability
- The expected demand for our existing and new products and
services as well as plans to launch new products and services
including research and development expenditures
- The ability to deliver on future plans and to realize
potential for future growth
- The expected operational or financial performance of strategic
cooperation activities and joint ventures
- The time until acquired entities and businesses will be
integrated and accretive to income
- Technology and industry trends including the regulatory and
standardization environment in which we operate, competition and
our customer structure.
The words "believe," "expect," "foresee," "anticipate,"
"assume," "intend," "likely," "projects," "may," "could," "plan,"
"estimate," "forecast," "will," "should," "would," "predict,"
"aim," "ambition," "seek," "potential," "target," "might,"
"continue," or, in each case, their negative or variations, and
similar words or expressions are used to identify forward-looking
statements. Any statement that refers to expectations, projections
or other characterizations of future events or circumstances,
including any underlying assumptions, are forward-looking
statements.
We caution investors that these statements are subject to risks
and uncertainties many of which are difficult to predict and
generally beyond our control that could cause actual results to
differ materially from those expressed in, or implied or projected
by, the forward-looking information and statements.
Important factors that could affect whether and to what extent
any of our forward-looking statements materialize include, but are
not limited to, the factors described in the section "Risk Factors"
in the latest interim report, and in "Risk Factors" in the Annual
Report 2020.
These forward-looking statements also represent our estimates
and assumptions only as of the date that they were made. We
expressly disclaim a duty to provide updates to these
forward-looking statements, and the estimates and assumptions
associated with them, after the date of this release, to reflect
events or changes in circumstances or changes in expectations or
the occurrence of anticipated events, whether as a result of new
information, future events or otherwise, except as required by
applicable law or stock exchange regulations.
This information is information that Telefonaktiebolaget LM
Ericsson is obliged to make public pursuant to the EU Market Abuse
Regulation. The information was submitted for publication, through
the agency of the contact person set out above at 7:00 AM CET on November
22, 2021.
This information was brought to you by Cision
http://news.cision.com
https://news.cision.com/ericsson/r/ericsson-to-acquire-vonage-for-usd-6-2-billion-to-spearhead-the-creation-of-a-global-network-and-com,c3457760
The following files are available for download:
https://mb.cision.com/Main/15448/3457760/1499422.pdf
|
Ericsson to acquire
Vonage for USD 6.2 billion to spearhead the creation of a global
network and communication platform for open innovation
|
View original
content:https://www.prnewswire.com/news-releases/ericsson-to-acquire-vonage-for-usd-6-2-billion-to-spearhead-the-creation-of-a-global-network-and-communication-platform-for-open-innovation-301429684.html
SOURCE Ericsson