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Ericsson gains clearance for Vonage purchase

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Ericsson has announced that the Committee on Foreign Investment in the United States (CFIUS) has approved its $6.2 billion acquisition of Vonage Holdings. The transaction is scheduled to close by Thursday, July 21.


The Swedish vendor’s most significant purchase to date is that of Vonage. This acquisition is a crucial component of Ericsson’s strategy, which calls for creating a market-leading service for businesses.


Both the company’s boards and shareholders have approved the $6.2 billion all-cash transaction, but the deal was briefly put on hold while the Committee on Foreign Investments in the United States (CFIUS) looked at it. Following the transaction’s announcement, Ericsson became involved in a controversy in February involving payments to the Islamic State militant organization in Iraq. This incident led to investigations by various U.S. authorities, raising concerns that the deal would be in jeopardy.


In spite of Ericsson’s offer price of $21 per share, Vonage shares closed at $19.65 on the Nasdaq on Thursday, 14 July. The value of Ericsson shares has dropped by a third this year.


Ericsson President and CEO Börje Ekholm, announced: “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. Today, with this announcement, we are making that ambition possible.”


Vonage was formed in 2001 as a consumer VoIP service provider, and is now a supplier of Communication Platform as a Service (CPaaS) to both consumers and businesses. The company currently provides unified corporate communications and contact center services, as well as an API library for app developers and other cloud-hosted applications.

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