TheNFAPost Podcast
7
  • Ericsson acquires the market-leader for Wireless Edge WAN solutions for an enterprise value of $1.1 billion
  • Acquisition complements Ericsson’s enterprise offerings and creates valuable new revenue streams for customers
  • Transaction expected to close during Q4 2020, subject to merger clearance and other closing conditions

Bengaluru, NFAPost: Ericsson has agreed to acquire Cradlepoint, the US-based market leader in Wireless Edge WAN 4G and 5G Enterprise solutions.

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. It will be part of Ericsson’s Business Area Technologies and New Businesses.

Gross margin

The acquisition price amounts to an enterprise value of $1.1 b. 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 b. 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 solutions 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%.

Ericsson President and CEO Börje Ekholm says portfolio-near acquisitions are an integral part of the company’s earlier communicated strategy.

Wireless WAN market

“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. Ericsson is uniquely positioned to build on Cradlepoint’s leadership position in Wireless Edge and the wireless WAN market,” said Ericsson President and CEO Börje Ekholm.

Combining the scale of Ericsson market access and established relationships with the world’s biggest mobile operators, Ericsson President and CEO Börje Ekholm said the company is making a strong investment to support its customers to grow in this exciting market.

“I would like to extend a very warm welcome to all Cradlepoint employees,” said Ericsson President and CEO Börje Ekholm.

Cradlepoint CEO and Chairman George Mulhern says the company has 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.

Enterprise-grade connectivity

“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,” said Cradlepoint CEO and Chairman George Mulhern.

Founded in 2006, Cradlepoint has more than 650 employees, providing wireless WAN solutions that deliver enterprise-grade connectivity. In addition to the company headquarters in Boise, Idaho, USA, the company operates a research and development center in Silicon Valley, California, and new market offices in the United Kingdom and Australia.

Cradlepoint’s subscription model combines cloud-delivered software with hardware endpoints, support and training. Ericsson’s long-standing collaboration with Cradlepoint dates back to the launch of 4G in the US market more than a decade ago.

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