Zoom to buy cloud software provider Five9 in $15 billion deal

Zoom Video Communications Inc. has agreed to buy cloud software provider Five9 Inc. in an all-stock deal for approximately $14.7 billion, targeting business customers looking to boost customer engagement, it said on Sunday.

The teleconferencing service provider has become a household name and investor favorite in the years since the coronavirus pandemic, as businesses and schools have embraced its services for virtual classes, office meetings and socializing.

San Jose, California-based company is now focusing on its two-year-old cloud-calling product Zoom Phone and conference-hosting product Zoom Rooms as big players Facebook and Alphabet’s Google enhance their video products.

“The acquisition is expected to help expand Zoom’s presence with enterprise customers and allow it to accelerate its long-term growth opportunity by adding to the $24 billion contact center market,” Zoom said in a statement.

It added that the acquisition will complement the Zoom phone service by connecting Five9’s business customers and its Contact Center software, which is an alternative to the older phone offerings.

Five9 will become an operating unit of Zoom and its chief executive, Rowan Trollope, will become the company’s president, with the unit remaining as head after the deal, which is expected to close in the first half of 2022, it said.

Under this agreement, Five9 stockholders will receive 0.5533 shares of Zoom’s Class A common stock for each share of Five9, approved by the boards of both companies.

Based on the July 16 closing share price of Zoom Class A common stock, this represents a price of $200.28 for each share of Five9 common stock and an estimated deal of approximately $14.7 billion.

Shares in Five9 closed up 0.6% on Friday at $177.60, while Zoom gained 1.4% to $361.97, valuing the company at about $106 billion.

Zoom grew 45% over the past year, as conferencing platforms, which also include Cisco Systems Inc.’s Webex and Microsoft Teams, have seen a surge in usage due to the coronavirus pandemic, which has created a platform for working, learning and socializing online. induced seismic changes. .

According to tech consultancy Gartner, global spending on cloud-based conferencing is projected to increase from $5.02 billion in 2020 to $5.41 billion this year. It doesn’t track market share, but analysts cite Zoom and Cisco as leaders.

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