Stock in Vonage Holdings (NASDAQ: VG) soared just under 25% with investors reacting well to the $6.2B cash acquisition from Ericsson after the Vonage Board of Directors granted unanimous approver for an agreement of $21 per share. The cloud-based communications provider will be part of Ericsson’s wider growth strategy to expand its global offerings.
The Vonage Communications Platform allows for robust performance and growth prospects, delivering roughly 80% of Vonage’s total revenue, serving over 1M global registered developers. The transaction is expected to close in the first half of 2022 following shareholder approval and will be accretive to Ericsson’s EPS and free cash flow (before M&A) from 2024.
With wireless enterprise expected to be worth $700M by 2030, it isn’t surprising the key players are looking to snap up their share. Ericsson has always proved active in pivotal developments to the technology market, and there is nothing different here.
Rory Read, Vonage CEO stated:
“Ericsson and Vonage have a shared ambition to accelerate our long-term growth strategy. The convergence of the internet, mobility, the cloud and powerful 5G networks are forming the digital transformation and intelligent communications wave, which is driving a secular change in the way businesses operate. The combination of our two companies offers exciting opportunities for customers, partners, developers and team members to capture this next wave.”
For two companies that share the same direction, this acquisition provides the footing for further global expansion into wireless technology; a move that should satisfy shareholders on both sides. Currently, Vonage is showing a daily gain of just over 25%, with price pushing over the $20.50 mark.
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