Zoom to acquire cloud-based call center operator Five9 in $15b deal

Visual from Zoom's Facebook page

Zoom Video Communications Inc struck a $14.7 billion all-stock deal to buy cloudbased call center operator Five9 Inc in its largest-ever acquisition, as it looks to expand beyond its core video-conferencing services.

Zoom 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 socialize.

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.

The deal makes strategic sense, as it helps accelerate Zoom‘s product roadmap outside of its core offering, Barclays analyst Raimo Lenschow wrote in a note.

The San Jose, California-based company is now shifting focus to its two-year-old cloudcalling 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 on Sunday.

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.

Based on Zoom‘s Friday close, this represents a price of $200.28 for each share of Five9 common stock, or nearly a 13% premium.

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 cloudbased 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.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.