Swedish telecommunications equipment manufacturer Ericsson said that it agreed to acquire Cradlepoint, a US 5G solution provider, for $1.1 billion.
The transaction amounted to US$1.1 billion. Ericsson said that the purchase price of US$1.1 billion will be paid in full upon completion of the transaction and will be paid in cash.
The transaction is expected to be completed before the end of the fourth quarter of 2020, depending on the conditions for completing the contract. After the completion of the acquisition, Cradlepoint will become a wholly-owned subsidiary of Ericsson and will continue to operate under its existing brand.
Ericsson expects that the company's operating profit margin in 2021 and 2022 will be negatively affected by about 1%. Cradlepoint is expected to contribute revenue to Ericsson from 2022.
When the United States started 5G networks, Cradlepoint established its position as a leading enterprise solution provider for the latest cellular technology, developed enterprise 5G broadband services in cooperation with Verizon, and developed first response in cooperation with AT&T 5G upgradeable mobile devices for consumers and enterprises.
And Ericsson announced that it will acquire Cradlepoint for $1.1 billion. This European communications manufacturer will acquire another asset while expanding its US business.
In May of this year, Cradlepoint announced a 5G-enabled edge router that allows corporate branches to abandon their wired broadband and switch to a fully wireless connection, using Wi-Fi 6 to share high-speed cellular signals with multiple office equipment. Unlike companies that fully support 5G, Cradlepoint’s solution specifically includes upgradeable modem modules that allow companies to initially access Gigabit 4G/LTE and can choose to switch modems when local 5G services are available. This move is strange to the United States the 5G deployment strategy remains the same.
Ericsson expects that Cradlepoint will continue to provide wireless wide area network (WWAN) solutions for enterprises and emergency personnel. With the increasing importance of 5G, the market is expected to grow by 25% to 30% in the next few years. Ericsson has continued to work with partners in the past two years, breaking 5G transmission speed and distance records, demonstrating the future potential of millimeter wave transmission in multiple environments, and developing sub-6GHz solutions to attract current customers worldwide .
At present, Cradlepoint is part of Ericsson's business technology and new business unit, and will continue to conduct business under its current name and 650 employees at its headquarters in Boise, Idaho. After the transaction is completed, the company will receive all 1.1 billion US dollars in cash.
Sweden's Ericsson was founded in 1876 and is one of the first global first-line telecommunications equipment suppliers to enter the market. Its business covers more than 180 countries and regions, and it is favored and trusted by European and American countries.
As of now, Ericsson has signed 109 5G orders worldwide, becoming the communications manufacturer with the most 5G orders.
For this acquisition of Cradlepoint, Ericsson believes it will help expand its 5G business.