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Highlights:
- Ericsson (Nasdaq:ERIC) gets regulatory nod for the US$6.2 billion deal to buy Vonage (Nasdaq:VG).
- The deal was stuck in limbo after US agencies launched investigations against Ericsson.
- It will be Ericsson’s largest acquisition deal so far.
Swedish telecom firm Ericsson (Nasdaq:ERIC) has received regulatory clearance from the US national security panel to go ahead with its US$6.2 billion deal to purchase cloud communication company Vonage (Nasdaq:VG), it said on Friday.
It will be Ericsson’s largest acquisition so far, agreeing to buy Vonage in November. The telecom firm is looking to diversify its revenue streams and, at the same time, shield itself from the cyclical nature of wireless mobile spending.
© Andreistanescu | Megapixl.com
Vonage deal got delayed
Last month, Ericsson said that the Vonage deal closing was delayed by a few months due to a pending investigation by the Committee on Foreign Investment in the United States (CFIUS).
The deal was supposed to be completed in the first half of 2022.
The imbroglio related to Ericsson’s bribing scandal in Iraq triggered an investigation by the US Department of Justice and the Securities and Exchange Commission (SEC).
Soon after announcing the deal, Ericsson got dragged into the controversy in February, in which the company was accused of making payments to the Islamic State militant group in Iraq.
It led to a flurry of investigations by different US agencies, casting aspersions on the Vonage deal.
Bottom line:
Vonage shares closed at US$19.65 on the Nasdaq on Thursday. Ericsson offers a price of US$21 a share as per the agreement. Meanwhile, Ericsson shares have plummeted by a third of their value this year.
