(RTTNews) - Swedish telecom equipment maker Ericsson (ERIC) announced Friday its agreement to acquire US-based Cradlepoint for an enterprise value of $1.1 billion.
Cradlepoint is a provider of Wireless Edge WAN 4G and 5G Enterprise solutions. The acquisition is in line with Ericsson's ongoing strategy of capturing market share in the rapidly expanding 5G Enterprise space.
The transaction expected to close before the end of the fourth quarter, 2020, subject to closing conditions. The purchase price, which is funded from Ericsson's cash-in-hand, is paid in full on closing.
The acquisition complements Ericsson's existing 5G Enterprise portfolio which includes Dedicated Networks and a global IoT platform.
Following the deal closure, Cradlepoint will become a subsidiary of Ericsson while continuing to operate under its existing brand. Cradlepoint's more than 650 employees will remain within the company, headquartered in Boise, Idaho. It will be part of Ericsson's Business Area Technologies & New Businesses.
In 2019, Cradlepoint's sales were 1.2 billion Swedish kronor, with a gross margin of 61%.
Regarding its outlook, Ericsson said its operating margins are expected to be negatively impacted by approximately 1 percent 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.
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