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Ericsson’s $6.2bn Vonage takeover delayed pending US review

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Ericsson’s US$6.2 billion takeover of Vonage Holdings Corp has been delayed until the end of July, pending an investigation by a US national security panel.

In a statement released today, Ericsson said it continues to work closely with the Committee on Foreign Investment in the United States (CFIUS) as it reviews the proposed acquisition.

“The merger has cleared all other requisite foreign and US regulatory approval requirements, and the parties are working to conclude the regulatory process as expeditiously as possible,” the statement added.

“Ericsson and Vonage remain fully committed to this transaction and are working towards closing before end of July 2022.”

Since the deal was accepted in November, Ericsson has faced a bribing scandal related to its activity in Iraq, leading to the US Department of Justice (DoJ) opening an investigation against the company.

The company reportedly paid total penalties of over US1 billion because of admitted misconduct in China, Djibouti, Kuwait and Vietnam.

Some observers in the industry expect the DoJ to exact further penalties on Ericsson or derail the deal for Vonage completely.

The initial acquisition was expected to close in the first half of this year.

Vonage was founded in 2001 as a VoIP provider for consumers before growing into a cloud communications provider.

According to Ericsson, the deal will give it access to more than one million developers a foot into an enterprise market expected to reach US$700 billion by 2030.

Börje Ekholm Ericsson president and CEO said in November that the deal will provide 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,” he added.

“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.”

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