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Zoom to Acquire Cloud Software Provider Five9 in $15 Billion Deal

Zoom has become a household name and investor favorite in the year since the coronavirus pandemic. (Image Credit: Reuters)

Zoom has become a household name and investor favorite in the year since the coronavirus pandemic. (Image Credit: Reuters)

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.

Zoom Video Communications has agreed to buy cloud software provider Five9 in an all-stock deal worth about $14.7 billion (roughly Rs 1.09 lakh crores) to target business clients looking to boost customer engagement, it said on Sunday. The teleconferencing services provider has become a household name and investor favorite 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 Alphabet’s 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 center market," Zoom said in a statement. 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, and an implied deal value of about $14.7 billion.

Shares in Five9 finished up 0.6% at $177.60 on Friday, while Zoom rose 1.4% at $361.97, valuing the company at around $106 billion. Zoom rose 45% over the past year, as conferencing platforms, which also include Cisco Systems Inc’s (CSCO.O) Webex and Microsoft (MSFT.O) Teams, have seen a surge in usage due to the coronavirus pandemic that has spurred a seismic shift to online working, learning and socializing.

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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.

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first published:July 19, 2021, 10:18 IST