Zoom to acquire cloud-based call center operator Five9 for $14.7 billion

Zoom Video Communications Inc signed a $14.7 billion deal to acquire cloud-based call center operator Five9 Inc as the company is trying to expand beyond its core video-conferencing services.

It has become an everyday tool since the pandemic, as individuals, businesses, and schools adopted its services to socialize and hold virtual classes and office meets.

Zoom was also investors’ favorite in 2020, but with rapid vaccination and life creeping back to normality, analysts and investors are closely monitoring the company’s plan to sustain its growth.

More than 2,000 global businesses like Under Armour, Lululemon Athletica Inc, and Olympus Corp use Five9’s cloud call center software to interact with customers.

The deal is a strategic acquisition to help accelerate Zoom’s business portfolio outside of its core offering, Barclays analyst Raimo Lenschow wrote in a note.

The California-based firm is shifting focus to its two-year-old cloud-calling product Zoom Phone and conference-hosting product Zoom Rooms as more prominent players, especially Microsoft Corp, Alphabet Inc’s Google and Cisco Systems Inc, is amping up their video conferencing product.

“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 on Sunday.

As part of the agreement, Five9 stockholders will receive 0.5533 shares of Zoom for each share of Five9, about $200.28 for each share, or nearly a 13% premium, based on Zoom’s Friday close.

The all-stock deal implied a transaction value of about $14.7 billion, the company’s largest-ever acquisition, and is anticipated to close in the first half of 2022.

Following the close of the transaction, Five9 will be an operating unit of Zoom, and its CEO Rowan Trollope will become a president of Zoom and will head Five9.

Zoom, which went public in 2019, surged more than 450% during the pandemic, were down nearly 5% on Monday.

Five9 shares were up about 6.5% at $188.98.

Picture Credit: Zoom