Ericsson accelerates 5G for Enterprise with acquisition of Cradlepoint
BOISE, Idaho — Ericsson 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.
Wireless wide area network (wireless WAN) Edge solutions connect through 4G and 5G to deliver fast, secure, and flexible connectivity wherever and whenever it is needed for businesses, mobility and critical frontline emergency services. Cradlepoint is strongly positioned in a market with underlying growth of 25-30%.
Börje Ekholm, President and CEO Ericsson, says: “Portfolio-near acquisitions are an integral part of our earlier communicated strategy. The acquisition of Cradlepoint complements our existing offerings and is key to our strategy of helping customers grow the value of their 5G network investments. Ericsson is uniquely positioned to build on Cradlepoint’s leadership position in Wireless Edge and the wireless WAN market. Combining the scale of our market access and established relationships with the world’s biggest mobile operators we are making a strong investment to support our customers to grow in this exciting market. I would like to extend a very warm welcome to all Cradlepoint employees.”
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.”
Founded in 2006, Cradlepoint has more than 650 employees, providing wireless WAN solutions that deliver enterprise-grade connectivity. In addition to the company headquarters in Boise, Idaho, USA, the company operates a research and development center in Silicon Valley, California, and new market offices in the United Kingdom and Australia.
Cradlepoint’s subscription model combines cloud-delivered software with hardware endpoints, support and training.
Ericsson’s long-standing collaboration with Cradlepoint dates back to the launch of 4G in the U.S. market more than a decade ago.
With more than 3,000+ agency customers, Cradlepoint has public safety and first responder deployments in every U.S. state, including 25 of the largest cities, providing mission-critical data networks for vehicles, mobile command centers, surveillance cameras, and incident response teams, as well as secure connectivity for in-vehicle, on-scene, and body-worn devices.
Cradlepoint is the global leader in cloud-delivered wireless edge solutions for branch, mobile, and IoT networks. Cradlepoint’s Elastic Edge™ vision — powered by NetCloud services —provides a blueprint for agile, pervasive and software-driven wireless WANs that leverage 4G and 5G services to connect people, places, and things everywhere with resiliency, security, and control. More than 25,000 enterprise and government organizations around the world, including 75 percent of the world’s top retailers, 50 percent of the Fortune 100, and first responders in 10 of the largest U.S. cities, rely on Cradlepoint to keep critical branches, points of commerce, field forces, vehicles, and IoT devices always connected and protected. Major service providers use Cradlepoint wireless solutions as the foundation for innovative managed network services. Founded in 2006, Cradlepoint is a privately held company headquartered in Boise, Idaho, with a development center in Silicon Valley and international offices in the UK and Australia.