Swedish multinational Ericsson said on Monday that it had agreed to buy Vonage Holdings Corp. (VG), a provider of cloud-based communications, for 21 dollars per share.
It represents a total acquisition price of about 6.2 billion dollars.
The deal price represents a premium of 28 per cent on Vonage's closing share price on November 19, 2021 of 16.37 dollars per share.
Ericsson expects to close the deal within the first half of 2022.
The acquisition will be financed through its existing cash resources.
The transaction is expected to deliver near-term revenue synergy opportunities, including white-labelling and cross-selling of the combined product portfolio estimated to contribute 0.4 billion dollars by 2025.
Ericsson also expects to achieve some cost efficiencies following completion of the transaction.
The transaction is expected to be accretive to earnings per share, excluding non-cash amortization impacts, and free cash flow before M&A from 2024 onwards.
On completion, Vonage will become a wholly owned subsidiary of Ericsson and will continue to operate under its existing name.
It will be reported as a separate segment in Ericsson accounts, Ericsson said in a statement.
Vonage is headquartered in Holmdel, New Jersey in the United States with 2,200 employees throughout the United States, EMEA and APAC.
Vonage's employees will remain with the company and the Vonage CEO Rory Read will join the Executive Team of Ericsson, reporting to CEO, Börje Ekholm.
Ericsson said it remains fully committed to previously communicated financial targets, including long-term EBITA margins of 15-18 per cent.
