Ericsson ( NASDAQ: ERIC ) has completed its acquisition of Vonage ( NASDAQ: VG ), filling out its communications suite and offering a further expansion into enterprise markets.
Vonage is now a wholly owned subsidiary of Ericsson, and adds Unified Communications-as-a-Service and Contact Center-as-a-Service to Ericsson's customers.
Vonage CEO Rory Read has been added to Ericsson's Executive Team.
"In the future, network capabilities will be consumed and paid for through open network APIs, creating the opportunity for unparalleled innovation," said Ericsson CEO Börje Ekholm. "By linking the network world with the global developer community, we're creating a paradigm shift that will put the network at the center, allowing the CSPs a new monetization opportunity supporting increasing investments in high-performance networks."
Ericsson ( ERIC ) Chief Financial Officer Carl Mellander hit back at some criticism (including from activist investor Cevian Capital) that the company overpaid in the $6.4B deal, saying strategically it was the "right thing to do" in acquiring a "value creating investment."
"We don't make a valuation based on the stock price one day or the other, but the fundamental value of future cash flows," Mellander told Bloomberg.
As for buying Vonage instead of repurchasing Ericsson shares, "There are always alternative uses for money," Mellander said. "We believe it's the right use of capital, to build a future for our company for the longer term."
He says Vonage fits "extremely well" and says cost synergies aren't the main driver of the deal, expecting revenue synergies of about $400M by 2025.
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Ericsson wraps acquisition of Vonage, seeing $400M in revenue synergies