Ericsson Acquires Cradlepoint
Friday, September 18, 2020 | Comments

Ericsson has agreed to acquire Cradlepoint, a provider of 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.

Cradlepoint complements Ericsson’s existing 5G enterprise portfolio, which includes dedicated networks and a global internet of things (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.

"Portfolio-near acquisitions are an integral part of our earlier communicated strategy,” said Ericsson President and CEO Börje Ekholm. “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.”

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 and New Businesses.

The acquisition price amounts to an enterprise value of $1.1 billion, and the transaction is expected to close before the end of the fourth quarter (Q4) 2020, subject to closing conditions. The purchase price, which is funded from Ericsson’s cash-in-hand, will be paid in full on closing. Cradlepoint’s sales for 2019 were about $135 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 amortization of intangible assets that arise from the acquisition. Cradlepoint is expected to contribute to operating cashflow starting in 2022. Ericsson’s 2022 group financial targets remain unchanged.

“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,” said Cradlepoint CEO and Chairman George Mulhern. “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.”

Cradlepoint’s 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%.

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, the company operates a research and development center 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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