Benzinga | Nov 22, 2021 05:34AM EST

Ericsson To Acquire Vonage At 28% Premium

Telefonaktiebolaget L M Ericsson (NASDAQ:ERIC) agreed to acquire Vonage Holdings Corp (NASDAQ:VG) for $6.2 billion. The purchase price values Vonage at $21 per share, implying a 28% premium to November 19 closing price. Vonage is a cloud-based communications provider based in Holmdel, New Jersey, with 2,200 employees throughout the U.S., EMEA, and APAC.

* The transaction builds upon Ericsson's aim to expand globally in the wireless enterprise, offering existing customers an increased share of a market valued at $700 billion by 2030.

* Ericsson held net cash of SEK 55.7 billion as of September 30.

* The transaction will likely deliver near-term revenue synergy opportunities estimated to contribute $0.4 billion by 2025.

* The transaction will likely be accretive to EPS and free cash flow before M&A from 2024 onwards.

* Vonage will become a wholly-owned subsidiary of Ericsson and will continue to operate under its current name. Ericsson expects to complete the deal within the first half of 2022.

* Vonage's employees will remain with the company, and the Vonage CEO Rory Read will join the Executive Team of Ericsson, reporting to CEO B?rje Ekholm.

* Ericsson also stated it remains fully committed to previously communicated financial targets.

* Price Action: ERIC shares traded lower by 3.94% at $10.49 in the premarket session on the last check Monday.