Ericsson had announced the acquisition of Vonage in November 2021
Ericsson said it expects the completion of its deal to buy U.S. cloud communications company Vonage to occur before the end of July, as the vendor continues to work with the Committee on Foreign Investment in the United States to get the approval for the proposed acquisition.
In a stock market update on the proposed transaction, the Swedish vendor said it had received all necessary approvals for the deal, with the exception of the U.S. foreign investment authority. According to published press reports, that timeline represents a delay of the deal closing, as the CFIUS review proceeds. Complicating the matter is the extent to which an active Securities and Exchange Commission investigation into Ericsson’s operations in Iraq, and allegations of associated bribery, might affect the proposed merger.
“The merger has cleared all other requisite foreign and US regulatory approval requirements, and the parties are working to conclude the regulatory process as expeditiously as possible. Ericsson and Vonage remain fully committed to this transaction and are working towards closing before end of July, 2022,” Ericsson said.
In November 2021, Ericsson announced the acquisition Vonage in a $6.2 billion deal, stating that the proposed acquisition would be fundamental to create a cloud-focused platform centered on open innovation.
Ericsson said that the buy underlines its strategy to expand its presence in wireless enterprise and broaden its global offerings.
The network equipment company had emphasized that Vonage’s “robust performance and growth prospects” are built on its Vonage Communications Platform (VCP). Ericsson noted that VCP provides about 80% of Vonage’s total revenues and serves more than one million registered developers around the world, who develop apps for about 120,000 business customers.
“Imagine putting the power of the 5G network—a massive, global innovation platform—at the fingertips of developers, and then backing it with Vonage advanced communications services in a world of 8 billion connected devices,” Ericsson President and CEO Börje Ekholm had said in a video posted to his Twitter account.
“The digitalization of business and demand for connected applications, especially video, is growing exponentially. This is going to continue for the foreseeable future, meaning a huge opportunity for Ericsson, for our customers, for businesses and ultimately, for end users,” Ekholm added.
In positioning the transaction, Ericsson touted Vonage’s Communication Platform as a Service (CPaaS) position as a complementary and high-growth area that will dovetail with—and ultimately, help to fuel—enterprise 5G applications and ecosystems. “With increasing investments in 4G and 5G – and a flourishing ecosystem of new applications and use cases leveraging the power of modern networks – demand from enterprises for programmable networks has been accelerating,” Ericsson said in explaining the acquisition. “In addition, Ericsson’s global leadership in 5G technology is expected to provide access to the developing space for open network APIs, which is expected to reach at least USD $8 billion by the end of the decade with a strong growth profile. …The combination of Vonage’s customer base and developer community and Ericsson’s deep network expertise … create opportunities to accelerate standalone strategies and innovation in the market. This includes accelerating enterprise digitalization and developing advanced APIs made possible by 5G; putting the power of the wireless network and communications at the finger-tips of the developer.”
