Ericsson's Deal to Buy Vonage Is Focus of Cfius Probe -- Update
By Stu Woo
The Committee on Foreign Investment in the U.S. is reviewing
Ericsson AB's proposed $6.2 billion acquisition of Vonage Holdings
Corp., Ericsson said, adding another regulatory challenge for the
Swedish telecom-equipment giant in Washington.
Ericsson said the deal has cleared all other U.S. and foreign
regulatory approval requirements. It said the companies were
working with the committee, known as Cfius, a Treasury
Department-led panel of federal agencies that determines how
foreign deals for U.S. assets could affect national security.
Ericsson said it hopes to close the transaction before the end
of July, a month later than it had previously forecast. A company
spokesman declined to comment further.
In November, Ericsson agreed to pay $6.2 billion in cash to buy
Vonage, a New Jersey-based company that was a pioneer in selling
subscriptions for individuals to make voice calls over the
internet. Vonage now focuses on providing businesses with
internet-based telecommunications services for customer service,
among other uses. It couldn't be learned why Cfius was reviewing
the deal. Representatives for the Treasury Department didn't
immediately return a request for comment.
Vonage shares closed at $17.58 on Monday, below Ericsson's
agreement to pay $21 a share. Vonage has traded below the offer
price for weeks, analysts say, because of uncertainty over the
outcome of the U.S. regulatory review.
Ericsson spent much of the past decade trying to revitalize its
core business of selling cellular-tower equipment and related
infrastructure to catch up with China's Huawei Technologies Co.,
the industry leader. A U.S. push to curtail Huawei business around
the world has benefited Ericsson and rival Nokia Corp.
The U.S. says the Chinese company can be compelled to spy on or
disrupt telecommunications networks by Beijing. Huawei denies
The U.S. government has sought to provide financial assistance
to developing countries, on the condition that they use Ericsson or
Nokia gear, instead of Huawei or Chinese alternatives.
More recently, though, Ericsson has faced scrutiny in
Washington. In April, Ericsson said it was likely to face fines
from the Justice Department for failing to disclose allegedly
paying bribes for access to terrorist-controlled areas in Iraq.
Earlier this month, Ericsson said the Securities and Exchange
Commission is also investigating the issue.
Ericsson has said that a 2019 internal investigation didn't
identify any Ericsson employee directly involved in financing
terrorist organizations, and that its internal investigation
resulted in several disciplinary and remedial steps.
Write to Stu Woo at firstname.lastname@example.org
(END) Dow Jones Newswires
June 28, 2022 07:38 ET (11:38 GMT)
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