Ericsson acquires Cradlepoint, the US-based market leader in Wireless Edge WAN 4G, and 5G Enterprise solutions.
FREMONT, CA: Ericsson announces its acquisition of Cradlepoint, the US-based market leader in Wireless Edge WAN 4G, and 5G Enterprise solutions. The investment will be significant for Ericsson's present strategy of capturing market share in the rapidly growing 5G Enterprise space. Therefore, Cradlepoint can complement Ericsson's current 5G Enterprise portfolio, consisting of dedicated networks and a global IoT platform.
The mutual offering will also help develop valuable new revenue streams for the consumers by supporting overall 5G-enabled services for enterprise and increasing returns on the network's investments. Cradlepoint will become a wholly owned subsidiary of Ericsson while continuing to function under its present brand name. Cradlepoint employees will remain in the organization.
The procurement price amounts to an enterprise value of USD 1.1 b. The transaction is expected to close before the end of Q4 2020, subject to closing conditions. Moreover, the purchase price, funded by Ericsson's cash-in-hand, is paid in full on closing. Cradlepoint's sales for 2019 were SEK 1.2 b. with a gross margin of 61%. It is estimated that Ericsson's functioning margins will be negatively impacted by approximately 1% in 2021 and 2022, where half is connected to the repayment of intangible assets, which rises from the acquisition. Cradlepoint is anticipated to contribute to operating cash-flow starting in 2022. Furthermore, Ericsson's 2022 group financial targets have remained unchanged.
The wireless vast area network (wireless WAN) Edge solutions are connected through 4G and 5G to provide fast, secure, and flexible connectivity wherever and whenever necessary for businesses, mobility, and critical forefront emergency services. Cradlepoint is firmly situated in a market with underlying growth of 25-30 percent.
According to a press release, Börje Ekholm, President and CEO Ericsson, said that portfolio-near acquisitions are important for the communicated strategy. This acquisition foils the present services and is one of the strategies used for helping customers grow the value of their 5G network investments. He would like to extend a very warm welcome to every Cradlepoint employee.