Skip to main content

Vonage Stock Jumps on $5.3B Accord for Takeover by Ericsson

Vonage shares jumped after the business communications service provider agreed to be purchased by Sweden's Ericsson for $5.3 billion.
  • Author:
  • Publish date:

Shares of Vonage  (VG) - Get Vonage Holdings Corp. Report jumped Monday after the business communications service provider agreed to be purchased by Ericsson  (ERIC) - Get Telefonaktiebolaget LM Ericsson Report for $5.3 billion in cash. 

The move comes about three months after Jana Partners, which owns about 4% of Vonage, implored the company to hire advisers to explore strategic alternatives, including a possible sale. 

Sweden-based Ericsson agreed to pay $21 a share for Vonage, Holmdel, N.J. 

The deal price is a premium of 28% to Vonage's closing share price on Friday of $16.37 a share. And the companies said it’s a premium of 34% to the volume-weighted average share price over the three months through Friday: $15.71 a share.

Shares of Vonage at last check were 25% higher at $20.42. Shares of Ericsson dropped 4% to $10.48.

Scroll to Continue

TheStreet Recommends

The enterprise value of the deal is $6.2 billion.

"The core of our strategy is to build leading mobile networks through technology leadership," Ericsson President and CEO Börje Ekholm said in a statement.

"This provides the foundation to build an enterprise business. The acquisition of Vonage is the next step in delivering on that strategic priority. Vonage gives us a platform to help our customers monetize the investments in the network, benefitting developers and businesses."

Vonage and its rivals are what The Wall Street Journal called communications platform-as-a-service companies. They give companies tools with which to interact with employees and customers by text message, chat services, video and voice.

Vonage's cloud-based communications platform accounts for about 80% of its annual $1.4 billion revenue.

Ericsson's move into cloud-based services comes when the company has seen its market share dip in China. And it has issues with component shortages due to the global supply-chain slowdown.