Ericsson buys Cradlepoint to drive 5G enterprise space

September 21, 2020 //By Jean-Pierre Joosting
Ericsson buys Cradlepoint to drive 5G enterprise space
Acquisition for an enterprise value of USD 1.1 billion complements Ericsson's 5G enterprise offerings and creates valuable new revenue streams for customers.

Ericsson has agreed to acquire Cradlepoint, the US-based market leader in wireless Edge WAN 4G and 5G enterprise systems. The investment is key to Ericsson's ongoing strategy of capturing market share in the rapidly expanding 5G enterprise space.

Cradlepoint complements Ericsson's existing 5G enterprise portfolio which includes Dedicated Networks and a global IoT platform. The combined offering will create valuable new revenue streams for customers by supporting full 5G-enabled services for enterprise, and boost returns on investments in the network.

Cradlepoint will become a fully owned subsidiary of Ericsson while continuing to operate under its existing brand. Cradlepoint employees will remain within the company, headquartered in Boise, Idaho.

The acquisition price amounts to an enterprise value of USD 1.1 billion with the transaction expected to close before the end of Q4 2020, subject to closing conditions. The purchase price, which is funded from Ericsson's cash-in-hand, is paid in full on closing. Cradlepoint's sales for 2019 were SEK 1.2 billion with a gross margin of 61%. Ericsson's operating margins are expected to be negatively impacted by approximately 1% in 2021 and 2022 – where half is related to amortization of intangible assets which arise from the acquisition. Cradlepoint is expected to contribute to operating cash-flow starting in 2022. Ericsson's 2022 group financial targets remain unchanged.

Wireless wide area network (wireless WAN) Edge systems connect through 4G and 5G to deliver fast, secure, and flexible connectivity wherever and whenever it is needed for businesses, mobility and critical frontline emergency services. Cradlepoint is strongly positioned in a market with underlying growth of 25-30%.

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