Ericsson (ERIC) just announced the acquisition of Cradlepoint, the market-leader for Wireless Edge WAN solution, as it accelerates its bid to capture more market share in the rapidly expanding 5G Enterprise space.
According to Verified Market Research, the Global 5G Enterprise Market was valued at USD 920 million in 2018 and is projected to reach USD 29.12 billion by 2026, growing at a CAGR of 54.00% from 2019 to 2026. And this puts the 5G Enterprise Market on the top list of fast-growing markets.
The acquisition, which will cost USD 1.1 billion, is expected to close before the end of Q4 2020.
Cradlepoint is a global leader in cloud-based network solutions for connecting people, places, and things over wired and wireless broadband. Its subscription based model combines cloud-delivered software with hardware endpoints, support and training. And its 2019 sales, which stood at SEK 1.2 billion, came in with a gross margin of 61%.
Borje Ekholm, President and CEO of Ericsson, said “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.”
The purchase will be funded cash-in-hand and will negatively impact Ericsson’s operating margins by approximately 1% in 2021 and 2022 according to Ericsson. However, the company expects Cradlepoint to contribute to operating cash-flow starting in 2022.
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