Ericsson agrees to acquire Vonage for $6.2B

Ericsson agreed to acquire all of Vonage Holdings Corp.'s outstanding shares for $21 per share, or an enterprise value of about $6.2 billion.

Vonage's board unanimously approved the merger, which will see the U.S. cloud communications company become a wholly owned subsidiary of Ericsson. Vonage will continue to operate under its existing name, according to a Nov. 22 news release.

The acquisition will be financed through Ericsson's existing cash resources and is expected to be accretive to EPS, excluding noncash amortization impacts, and free cash flow before the merger from 2024 onward.

Vonage provides unified communications as a service and contact center as a service solutions as part of the Vonage Communications Platform, which serves over 120,000 customers and accounts for about 80% of Vonage's current revenues.

The U.S. company has about 2,200 employees in the U.S., Europe, Middle East and Africa, and Asia-Pacific regions.

The transaction will provide Ericsson with a foundation to build an enterprise business, according to President and CEO Börje Ekholm.

The merged companies' revenue synergy opportunities, including white-labeling and cross-selling the combined product portfolio, are estimated to contribute $400 million by 2025.

The completion of the transaction, subject to approvals from Vonage shareholders and regulators as well as other customary conditions, is expected within the first half of 2022.

Qatalyst Partners LP is serving as a financial adviser on the deal, and Weil Gotshal & Manges LLP is serving as a legal adviser in relation to the strategic review and the transaction.