Zoom Video Communications has announced a US$14.7-billion all-stock deal to buy cloud-based call centre operator Five9 in its largest-ever acquisition, as competition intensifies in its core video-conferencing sector.
Zoom has become a household name and investor favourite in the year since the coronavirus pandemic, as businesses and schools adopted its services to hold virtual classes, office meets and socialise.
The San Jose, California-based company is now shifting focus to its two-year-old cloud-calling product Zoom Phone and conference-hosting product Zoom Rooms as bigger players Facebook and Google amp 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 optimise customer interactions across channels, it added.
Five9’s customers include Under Armour, Lululemon Athletica and Olympus Corp, according to its website. It will become an operating unit of Zoom and its CEO, 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 16 July 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, which went public in 2019, rose 1.4% to $361.97 on Friday, valuing the company at around $106-billion. Zoom rose 45% over the past year, as conferencing platforms, which also include Cisco Systems’ Webex and Microsoft Teams, have seen a surge in usage due to the coronavirus pandemic that has spurred a seismic shift to online working, learning and socialising.
Global spending on cloud-based conferencing is forecast to reach $5.41-billion this year, up from $5.02-billion in 2020, according to tech consultancy Gartner. It does not track market share, but analysts cite Zoom and Cisco as the leaders. — Reported by Kanishka Singh in Bengaluru, (c) 2021 Reuters