Zoom Video Communications Inc has finally sealed an all-stock deal of $14.7 billion in order to buy cloud-based call center operator Five9 Inc in its largest-ever acquisition.
Zoom has become very popular especially during pandemic. But with rapid vaccination and life creeping back to normality, analysts and investors are looking to see how Zoom will sustain its hot streak of growth, especially with rivals Microsoft Corp, Cisco Systems Inc and Alphabet Inc`s Google snapping at its heels.
Five9, whose call center software is used by more than 2,000 clients across the globe to interact with their clients, counts firms such as Under Armour, Lululemon Athletica Inc and Olympus Corp as customers.
This deal will further help in accelerating Zoom`s product roadmap outside of its core offering, Barclays analyst Raimo Lenschow wrote in a note.
Zoom has now planned to focus on its two-year-old cloud-calling product Zoom Phone and conference-hosting product Zoom Rooms as bigger players 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.
Under the terms of the deal, approved by the boards of both companies, Five9 stockholders will receive 0.5533 shares of Zoom stock for each share of Five9.aaa
Zoom shares, which have surged more than 450% since going public in 2019, were down 1.5% on Monday. Five9 shares were up 6% at $188.5.
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.
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.
Goldman Sachs advised Zoom and Qatalyst Partners advised Five9.
