VG - Vonage falls after being cut to sell on higher risk of Ericsson deal failure

Vonage (NASDAQ:VG) dropped 2.8% in premarket trading after it was cut to sell at Craig-Hallum after Ericsson (NASDAQ:ERIC), which is purchasing Vonage, announced on Thursday that the SEC was probing the alleged Iraqi bribery allegations. The analyst is moving his rating to sell as he sees the current Vonage (VG) price implying too high a deal close likelihood, Craig-Hallum analyst George Sutton wrote in a note. In the absence of any decision from regulators, he expects the deal will be terminated on Aug. 22, when the end date for previous deal extension expires. "We believe, based on post-deal performance from comps, Q1 estimates that missed street expectations and current valuation, the stock will see significant downside should the deal not go through.." Sutton wrote in the note. Sutton believes Ericsson may be paying $3.7 billion too much for Vonage. Investors have been concerned for the last few months that a national security or CFIUS review

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Vonage falls after being cut to sell on higher risk of Ericsson deal failure