© Ericsson Electronics Production | September 18, 2020
Ericsson accelerates 5G for Enterprise with acquisition of Cradlepoint
Swedish telecom company, Ericsson, has agreed to acquire Cradlepoint, a US-based supplier of Wireless Edge WAN 4G and 5G Enterprise solutions.
The investment is described as key to Ericsson’s ongoing strategy of capturing market share in the expanding 5G Enterprise space. The US company complements Ericsson’s existing 5G Enterprise portfolio which includes Dedicated Networks and a global IoT platform. 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. The acquisition price amounts to an enterprise value of USD 1.1 billion, and the transaction is expected to close before the end of Q4 2020, subject to closing conditions. Last year, Cradlepoint recorded sales of SEK 1.2 billion (USD 136.6 million) with a gross margin of 61%, a press release reads. Ericsson’s operating margins are expected to be negatively impacted by approximately 1% 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. 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%. "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,” says Börje Ekholm, President and CEO Ericsson, in the press release. Cradlepoint has more than 650 employees, providing wireless WAN solutions. In addition to the company headquarters in Boise, Idaho, USA, the company operates a research and development center in Silicon Valley, California, and new market offices in the United Kingdom and Australia. Ericsson’s collaboration with Cradlepoint dates back to the launch of 4G in the U.S. market more than a decade ago.