US-based communications technology company, Zoom Video Communications has agreed to acquire cloud software provider Five9 in an all-stock deal worth about $14.7 billion, targeting a call center provider to bolster its popular videoconference app against tightening competition.
Since the outbreak of the coronavirus pandemic, the teleconferencing services provider gained immense popularity, as businesses and schools adopted its services to hold virtual classes, office meets and socialize.
The 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 are boosting 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.
Further, the company added that the acquisition will complement Zoom Phone service, an alternative to legacy phone offerings, by adding Five9’s business customers and combining its contact center software to optimize customer interactions across channels.
After the completion of the acquisition, Five9 will become an operating unit of Zoom and its chief executive, Mr. Rowan Trollope, will become the president of the company, staying on as chief of the unit after the deal.
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 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.
Over the past year, Zoom rose 45 percent, as conferencing platforms, which also include Cisco Systems Inc’s Webex and Microsoft Teams, have seen a surge in usage due to the coronavirus pandemic that has spurred a shift to online working, learning, and socializing.
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.