Zoom to buy Five9 for $14.7 billion

The acquisition is expected to help enhance Zoom’s presence with enterprise customers

Zoom Video Communications announced a $14.7 billion all-stock deal to buy cloud-based call centre operator Five9 Inc. It is the company’s largest-ever acquisition amid intensifying competition in its core videoconferencing sector.

The teleconferencing services provider has become a household name and investor favourite since the pandemic struck, as businesses and schools used its services to hold online classes and office meetings.

The company is now shifting focus to its cloud-calling product Zoom Phone and conference-hosting product Zoom Rooms as big tech companies like Facebook and Google ramp up their video products.

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

The acquisition will complement Zoom Phone service, an alternative to legacy phone offerings, by adding Five9’s business customers and combining its contact centre software to optimize customer interactions across channels, it added.

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

Under the pact, approved by the boards of both companies, Five9 stockholders will receive 0.5533 shares of Class A common stock of Zoom for each share of Five9, it added.

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, or nearly a 13% premium, and an implied deal value of about $14.7 billion.

Shares in Zoom increased 1.4% to $361.97 on Friday, which valued the company at nearly $106 billion.

Zoom gained 45% over the past year, as conferencing platforms have seen a surge in usage due to the pandemic that has spurred a shift to online working, learning and socializing.