By Dominic Chopping
STOCKHOLM--Ericsson AB on Friday announced the acquisition of Cradlepoint, a U.S.-based provider of wireless internet connectivity products, for an enterprise value of $1.1 billion.
"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," said Ericsson Chief Executive Borje Ekholm.
Cradlepoint's wireless wide area network Edge solutions connect through 4G and 5G to deliver internet connectivity wherever it is needed for businesses, mobility and critical frontline emergency services. Ericsson said the deal is key to its continuing strategy of capturing market share in the rapidly expanding 5G enterprise space.
The purchase price, funded from Ericsson's cash-in-hand, will be paid in full on closing, which is expected before the end of the fourth quarter 2020.
Founded in 2006, Cradlepoint has over 650 employees between its headquarters in Boise, Idaho, a research and development center in Silicon Valley, California, and market offices in the U.K. and Australia.
Cradlepoint's sales for 2019 were 1.2 billion Swedish kronor ($136.1 million) and it had a gross margin of 61%. Ericsson's operating margins are expected to be negatively impacted by approximately 1% in 2021 and 2022, but Cradlepoint is expected to contribute to operating cash-flow starting in 2022.
Ericsson's 2022 group financial targets remain unchanged.
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