Ericsson buys Cradlepoint for wireless Edge WAN solutions in US$1.1bn deal - The EE

Ericsson buys Cradlepoint for wireless Edge WAN solutions in US$1.1bn deal

Ericsson has agreed to acquire Cradlepoint, the US-based specialist 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.

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%.

Cradlepoint is said by its new owners to complement 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 & New Businesses.

The acquisition price amounts to an enterprise value of US$1.1 billion (€0.93 billion) 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 billion ($130 million (€110 million)) 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 amortisation 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.

Borje Ekholm

Borje Ekholm, president and CEO Ericsson, says: “Portfolio-near acquisitions are an integral part of our earlier communicated strategy. 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. Combining the scale of our market access and established relationships with the world’s biggest mobile operators we are making a strong investment to support our customers to grow in this exciting market. I would like to extend a very warm welcome to all Cradlepoint employees.”

George Mulhern, CEO and chairman of Cradlepoint comments: “We have 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. 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.”

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 centre 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 U.S. market more than a decade ago.

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