Cradlepoint Acquisition: Key Details, Impact, and What Comes Next

Ericsson's acquisition of Cradlepoint marks a significant move in the 5G enterprise market. By integrating Cradlepoint's Wireless Edge WAN solutions, Ericsson aims to enhance its enterprise offerings and accelerate 5G adoption. This strategic acquisition is expected to create new revenue streams and expand Cradlepoint's international presence, positioning both companies for future growth.

What Is Cradlepoint?

Founded in 2005, Cradlepoint specializes in Wireless WAN and private cellular networks, offering solutions like routers, adapters, and radios. Their core products include flexible 5G connectivity, zero trust security models, and private cellular networks tailored for enterprise needs. Cradlepoint stands out with its emphasis on the adaptability of 5G technology, robust security through zero trust models, and a global partner network that ensures effective implementation of their solutions.

Who Acquired Cradlepoint?

Ericsson is a leading global provider of communication technology and services, playing a crucial role in shaping the world of communication through innovative solutions in 5G, AI, cloud, and IoT. Key products include the Ericsson Radio System, Cloud RAN, and private networks, while their services range from network deployment to managed network services. Ericsson holds a significant market position as a global leader in 5G technology and enterprise connectivity, driving innovation across various sectors.

When Was Cradlepoint Acquired?

Ericsson announced its acquisition of Cradlepoint on September 18, 2020, and completed the transaction on November 2, 2020. This acquisition aligns with Ericsson's strategy to enhance its 5G enterprise offerings amid a rapidly expanding market. The timing is significant as it coincides with the increasing demand for advanced connectivity solutions, driven by the acceleration of digital transformation and the growing interest in private networks within the enterprise sector.

Why Was Cradlepoint Acquired?

• Market Expansion: Ericsson's acquisition of Cradlepoint is a strategic move to capture market share in the rapidly expanding 5G enterprise space. The acquisition is expected to create valuable new revenue streams for customers by supporting full 5G-enabled services for enterprises. Additionally, Ericsson’s global presence and long-standing relationships with the world’s leading service providers will help accelerate Cradlepoint’s international expansion.
• Technology Integration: Cradlepoint’s Wireless Edge WAN solutions, which connect through 4G and 5G, will complement Ericsson’s existing 5G Enterprise portfolio, including Dedicated Networks and a global IoT platform. This integration aims to boost returns on investments in the network and support the delivery of fast, secure, and flexible connectivity for businesses and critical services. By leveraging the combined offering, Ericsson will be able to create valuable new revenue streams for its customers by supporting 5G-enabled services for enterprise.
• Competitive Advantage: The acquisition positions Ericsson to build on Cradlepoint’s leadership in the Wireless Edge and wireless WAN market. By combining Cradlepoint's market position with Ericsson's scale, market access, and established relationships with major mobile operators, Ericsson aims to enhance its competitive advantage in the 5G enterprise market. Together, they will power solutions to the customer edge that help improve productivity and deliver real-time services, enabling faster adoption of 5G in enterprise segments.

Acquisition Terms

• Acquisition Price: USD 1.1 billion
• Payment Method: The purchase price was funded from Ericsson’s cash-in-hand and paid in full upon closing.
• Key Conditions or Agreements:
  • The transaction was subject to merger clearance and other closing conditions.
  • Cradlepoint will continue to operate under its existing brand as a fully owned subsidiary of Ericsson.
  • Over 700 Cradlepoint employees will join Ericsson.
  • Ericsson’s operating margins are expected to be negatively impacted by approximately 1% in 2021 and 2022 due to amortization of intangible assets from the acquisition.
  • Cradlepoint is expected to contribute to operating cash flow starting in 2022.

Impact on Cradlepoint

The acquisition of Cradlepoint by Ericsson has led to significant changes in operations and management. Cradlepoint now operates as a fully owned subsidiary within Ericsson’s Business Area Technologies & New Businesses, maintaining its headquarters in Boise, Idaho. The integration has brought over 700 Cradlepoint employees into Ericsson, ensuring continuity while leveraging Ericsson’s global resources. Despite the operational changes, Cradlepoint continues to function under its existing brand, preserving its identity and customer trust.

Product offerings and services have seen a notable enhancement post-acquisition. The combined expertise of Cradlepoint in Wireless WAN and Ericsson’s leadership in 5G technology has expanded the portfolio to include advanced solutions like private 5G networks and cellular-optimized security. This integration aims to provide enterprises with robust, secure, and flexible connectivity options. Employee reactions have been positive, with leadership expressing excitement about the growth opportunities. Customers are optimistic, anticipating improved returns on 5G investments and enhanced service offerings.

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