Tue | Sep 28, 2021

Zoom buying cloud phone service Five9 in all-stock transaction

Published:Friday | July 23, 2021 | 12:06 AM

Zoom, the videoconferencing company whose growth was supercharged by the pandemic over the past year, will buy the cloud call centre company Five9 in an all-stock deal valued at about US$14.7 billion.

That is far greater than Zoom’s market valuation a little over two years ago when it went public for slightly more than US$9 billion.

Zoom founder and CEO Eric Yuan said in a blog post Sunday that the acquisition will accelerate the company’s long-term growth by adding the US$24 billion contact centre market. That will give Zoom greater exposure to more business clients. Yuan added that the deal also complements the Zoom Phone, a cloud phone system that is seeing strong demand.

The size of the deal would have seemed unthinkable when Zoom Video Communications Inc went public in early 2019, before it became a household name. With the arrival of the pandemic and a global shift to working from home, Zoom is everywhere.

Its stock, which could be bought for less than US$70 each at the start of 2020 just before the detection in the United States of COVID-19, is now worth five times that.

There was indications that Zoom might be in the hunt for acquisitions early this year that would accommodate more growth. In January, the company announced a secondary offering of shares that could raise up to US$1.5 billion for, among other things, “acquisitions or strategic investments”.

Shareholders of Five9 Inc will receive 0.5533 shares of Class A common stock of Zoom for each share of Five9.

Five9 will become a unit of Zoom once the transaction closes. Rowan Trollope will become a president of Zoom and continue as Five9 CEO. The deal still needs approval from Five9 shareholders. It is expected to close in the first half of 2022.

AP