Ericsson Accelerates 5G for Enterprise with Acquisition of Cradlepoint

By Naresh Kumar Surepelly

Category:
Acquisition or Partnership

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

Cradlepoint’s subscription model combines cloud-delivered software with hardware endpoints, support and training.

  

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