RFQ/BOM 0 Sign In / Register

Select Your Location

Ericsson agreed to acquire Cradlepoint, a US 5G solution provider, for US$1.1 billion.

Published :9/21/2020 4:06:20 AM

Click Count:2103

On September 18, according to foreign media reports, on Friday local time, Swedish telecommunications equipment manufacturer Ericsson stated that it has agreed to acquire Cradlepoint, a US 5G solution provider, for US$1.1 billion.

After the acquisition, Cradlepoint will become a wholly-owned subsidiary of Ericsson and will continue to operate under the existing brand, and the company's employees will still be retained.

Ericsson said that the transaction is expected to be completed before the end of the fourth quarter of 2020, depending on the conditions for completing the contract. This transaction will help expand its 5G business.

In addition, the company said that the purchase price of $1.1 billion will be paid in full upon completion of the transaction and will be paid in cash.

Founded in 2006, Cradlepoint is a Wireless Edge WAN 4G and 5G enterprise solution provider. The company has more than 650 employees, provides enterprise-level connectivity wireless WAN solutions, sells routers and subscription-based wireless network services. Although Cradlepoint is mainly focused on the US market, Ericsson's goal is to bring its products outside of North America and plans to operate it as an independent business.

Ericsson said: "This investment is the key to Ericsson's strategy to gain market share in the rapidly expanding 5G enterprise sector. CradlePoint complements Ericsson's existing 5G enterprise portfolio, which includes private networks and global IoT platforms."

Ericsson CEO Borje Ekholm has repeatedly stated that acquisitions are an integral part of its 5G strategy. He said in the statement: "The acquisition of CradlePoint is a complement to our existing products and is also the key to our strategy to help customers increase the value of 5G network investment."

As a wholly-owned subsidiary of Ericsson, CradlePoint will continue to operate under its own brand. It is reported that the company's sales in 2019 are approximately 135 million U.S. dollars, with a gross profit margin of 61%.

Ericsson said its operating profit margin is expected to be negatively affected by about 1% in 2021 and 2022, half of which will come from the amortized cost of intangible assets related to the acquisition.

CradlePoint is expected to contribute to operating cash flow from 2022. Ericsson said that its group financial goals for 2022 have not changed.