Ericsson to acquire Cradlepoint for $1.1bn
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Ericsson to acquire Cradlepoint for $1.1bn

Börje Ekholm 995x559.jpg

Ericsson has agreed to acquire Cradlepoint, a US-based provider of Wireless Edge WAN 4G and 5G enterprise solutions, for $1.1 billion.

The acquisition forms part of Ericsson's ongoing strategy to capture a market share in the 5G Enterprise space. Cradlepoint joins Ericsson's existing 5G enterprise portfolio which includes dedicated networks and a global IoT platform.

Once the deal is completed, Cradlepoint will become a fully owned subsidiary of Ericsson continuing to operate under the Cradlepoint brand. In addition, Cradlepoint employees will stay within the company based in Boise, Idaho, joining Ericsson's business area technologies & new businesses.

Together, the new combined offering will create new revenue streams for customers by supporting full 5G-enabled services for enterprise, and boost returns on investments in the network.

"Portfolio-near acquisitions are an integral part of our earlier communicated strategy. The acquisition of Cradlepoint complements our existing offerings and is key to our strategy of helping customers grow the value of their 5G network investments,” said Börje Ekholm (pictured), president and CEO at Ericsson.  

“Ericsson is uniquely positioned to build on Cradlepoint's leadership position in Wireless Edge and the wireless WAN market. Combining the scale of our market access and established relationships with the world's biggest mobile operators we are making a strong investment to support our customers to grow in this exciting market. I would like to extend a very warm welcome to all Cradlepoint employees."

Due to close end of Q4 2020, the acquisition has been priced at an enterprise value of $1.1 billion as part of an all-cash deal is to be paid in full on closing.

As a result of the deal, Ericsson's operating margins are expected to be negatively impacted by approximately 1% in 2021 and 2022, due to Cradlepoint's sales for 2019 amounting to SEK 1.2 billion with a gross margin of 61%.

Additionally, Cradlepoint is expected to contribute to operating cash-flow starting in 2022, while Ericsson's 2022 group financial targets will remain unchanged. 

"We have led the way in bringing the power of cellular networks and technologies to enterprise and public sector customers - helping them connect beyond the limits of traditional wired WANs,” added George Mulhern, CEO and chairman at Cradlepoint.

“Ericsson with its global 5G leadership is a great match for us and I am very excited to continue to scale and expand our business together."

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