Ericsson (NASDAQ: ERIC) has agreed to acquire Cradlepoint, the US-based market leader 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. Cradlepoint complements 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 USD 1.1 b. 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 b. 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 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.
George Mulhern, CEO and Chairman, Cradlepoint says: “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.”
One of the most innovative technology companies in Idaho history has been Cradlepoint. From its founders who came from HP, to its investment roots from the Boise Angle Fund and Highway 12, Cradlepoint has grown to a global player in the mobility space. The Cradlepoint acquisition is the largest tech deal in Idaho. A side from having amazing wireless technologies and being a leader in the wireless industry, Cradlepoint has an amazing leadership team that is led by its CEO, George Mulhern and has an amazing culture. The Ericsson acquisition will be a tremendous deal for Boise as the companies share similar cultures, this will help with end-to-end wireless technologies, and Ericsson will grow its presence in Idaho and continue to grow wireless innovation through Cradlepoint assets. Most important, the Ericsson deal keeps the Cradlepoint team in tact and focusing on disruptive technologies in the wireless space.