The investment underscores Ericsson’s development strategy to gather a market share in the rapidly expanding 5G enterprise space.
At closing, Ericsson paid US$1 billion in cash for the company. This figure takes into consideration Cradlepoint’s SEK 1.2 billion in sales for 2019 with a gross margin of 61%.
With this acquisition 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. However, Cradlepoint is expected to contribute to Ericsson’s operating cash-flow starting in 2022.
“I am very excited to welcome Cradlepoint to the Ericsson family. With Cradlepoint’s market leading solutions, we are strengthening our enterprise offering and taking an important step to lead the next wave of enterprise network transformation,” said Åsa Tamsons (pictured), senior vice president and head of business area technologies & new businesses, Ericsson.
“Together, we will power solutions to the customer edge that help improve productivity and deliver real-time services, enabling us to drive faster adoption of 5G in enterprise segments. This is good news for our customers as it helps them to accelerate their returns on 5G investments.”
Combining Cradlepoint’s solutions, that enable companies to connect sites, vehicles, mobile workforces, and IoT devices using cellular technology with Ericsson’s network solution, will create new revenue streams for its customers by supporting 5G-enabled services for enterprise, and boost returns on investments in the network.
In addition, Ericsson’s global presence and long-standing relationships with the world’s leading service providers will also help accelerate Cradlepoint’s international expansion.
Cradlepoint will operate as a stand-alone subsidiary within Ericsson as part of Ericsson’s Business Area Technologies & New Businesses.
