July 19 (Reuters) – Zoom Video Communications Inc (ZM.O) has reached a $ 14.7 billion stock deal to buy cloud-based call center operator Five9 Inc (FIVN.O) in as part of its largest acquisition, as it seeks to expand beyond its core video conferencing services.
Zoom has become a household name and an investor favorite over the year since the coronavirus pandemic, as businesses and schools have adopted its services for hosting virtual classes, office meetings and socializing.
But with the rapid vaccination and the return to normalcy of life, analysts and investors are looking to see how Zoom will maintain its growth streak, especially with rivals Microsoft Corp (MSFT.O), Cisco Systems Inc (CSCO. O) and Alphabet Inc. (GOOGL.O) Google is slapping on its heels.
Five9, whose call center software is used by more than 2,000 customers around the world to interact with their customers, includes companies such as Under Armor (UAA.N), Lululemon Athletica Inc (LULU.O) and Olympus Corp (7733.T) 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, Calif., Based company is now focusing on its Zoom Phone cloud calling product and Zoom Rooms conference hosting product, as the biggest players scale up their video products.
“The acquisition is expected to help strengthen Zoom’s presence with corporate clients and enable it to accelerate its long-term growth opportunity by adding the $ 24 billion contact center market,” Zoom said in a statement. Sunday.
Under the terms of the agreement, approved by the boards of directors of the two companies, the shareholders of Five9 will receive 0.5533 Zoom shares for each share of Five9.
Based on Zoom’s Friday close, this represents a price of $ 200.28 for each common share of Five9, or a premium of almost 13%.
Zoom shares, which have jumped more than 450% since their IPO in 2019, fell 1.5% on Monday. Five9 shares rose 6% to $ 188.5.
Five9 will become a business unit of Zoom and its chief executive, Rowan Trollope, will become chairman of the company, remaining as the head of the unit after the deal, which is expected to be concluded in the first half of 2022, he said.
Global spending on cloud-based conferencing is expected to reach $ 5.41 billion this year, from $ 5.02 billion in 2020, according to technology consultancy Gartner. It doesn’t track market share, but analysts cite Zoom and Cisco as the leaders.
Goldman Sachs advised Zoom and Qatalyst Partners advised Five9.
Reporting by Kanishka Singh, Subrat Patnaik and Tiyashi Datta in Bengaluru; Editing by Miyoung Kim, Clarence Fernandez, Gerry Doyle and Anil D’Silva
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