In Monday's premarket trading, Vonage shares jumped 27% after Ericsson made an offer to buy the Cloud-communications provider for $6.2 billion to develop its wireless enterprise business.

Ericsson's ADRs plummeted more than 3% due to value worries around the Swedish company's largest deal ever. The telecom equipment maker is paying $21 in cash for each Vonage share, a 28 % premium over the stock's Friday closing price.

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The acquisition will be funded by Ericsson's internal accruals. The total addressable market for Vonage Cloud-communications platform is expected to reach $69 billion by 2025, up from $31 billion in 2020.

The cloud communications market has experienced a flurry of activity recently as demand for digital services has increased, attracting new investors and prompting enterprises to expand their end-to-end solution offerings.

Companies that provide communications platforms as a service, such as Vonage, have features that allow employees and customers to engage via chat, video, and audio. With 5G, which is being rolled out by operators all over the world, such services can be used more widely.

The purchase is expected to be EPS accretive for Ericsson. Vonage employs 2,200 people and generated $1.4 billion in revenue in the fiscal year ending September 30.

Excluding Vonage, the Swedish firm reiterated its objective of a 12 % to 14 % EBIT margin in 2022.