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Ericsson bolsters 5G portfolio with $1.1b Cradlepoint buyout

Enterprise network solutions provider Cradlepoint will soon be under new ownership, thanks to a US$1.1 billion deal with Ericsson.

Ericsson will acquire Cradlepoint to create greater market share in the enterprise 5G space, boosting Ericsson's existing 5G portfolio that includes IoT and enterprise network solutions.

Ericsson will manage Cradlepoint as a fully owned subsidiary, under the Ericsson Business Area Technologies - New Businesses unit. Cradlepoint will keep its existing branding. All 650 Cradlepoint employees will remain within the company.

According to Ericsson president and CEO Börje Ekholm says that the acquisition is key to helping customers grow the value of their 5G investments.

“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.

According to Ericsson, Cradlepoint is strongly positioned in the wireless wide area network (wireless WAN) edge market with underlying growth of 25-30%.

Ericsson and Cradlepoint have also worked together in a collaborative partnership for more than 10 years, starting with the launch of 4G in the United States market.

“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,” comments Cradlepoint CEO and chairman George Mulhern.

“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.

Ericsson will fund the purchase with cast-in-hand.

Ericsson also states that “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.

The transaction is expected to close before the end of Q4 2020.

Ericsson has also launched expanded its 5G network security product with a new cloud-native firewall for the 5G core.

Ericsson Packet Core Firewall is powered by A10 Networks security and integrated with Ericsson Packet Core Gateway. It enables communications service providers to provide 5G core networks with security that can protect data such as service provider data and customer data.

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