Zoom to purchase call centre provider Five9 for $14.7bn as part of expansion
Zoom Video Communications agreed to acquire Five9 for $14.7 billion in its largest acquisition yet, choosing a call centre provider to bolster its popular videoconference app against stiffening competition.
Zoom will use its surging stock to pay for the deal, giving Five9 investors 0.5533 shares of its Class A common stock. Five9 will become a Zoom operating unit after the deal, which is subject to shareholder approval and slated to close in the first half of 2022.
The acquisition could propel Zoom into a $24bn market for contact centres, the company said, helping it better compete with the likes of RingCentral that hook up users around the world via the internet.
The deal is designed to help it build up Zoom Phone, a cloudbased calling service, the companies said. Five9’s customers include big names such as Under Armour, Citrix, Athena Health and Lululemon, according to its website. The transaction is also designed as a way for Zoom and Five9 to sell products to each others’ customers.
“We are continuously looking for ways to enhance our platform, and the addition of Five9 is a natural fit,” said Zoom chief executive Eric Yuan.
Zoom rose to prominence after the pandemic hit in early 2020, becoming ubiquitous as people forced home by lockdowns used the service to connect remotely to work, school, friends and family. But investors have raised concerns this year about whether that growth will continue as vaccinations increase and shutdowns end.
“The unified communications and collaboration market share of total IT spending may remain stable at around 5 per cent as companies shift to cloud-native platforms, and should stay so post-pandemic,” according to Bloomberg Intelligence analysts Amine Bensaid and Mandeep Singh.
“Organisations are rethinking their plans for digital technologies to include video, voice and team collaboration tools as flexible or hybrid-work models gain traction.
“UCaaS [unified communications as a service] should stay a key growth driver for the $47 billion UC&C industry, with companies increasingly bundling video and collaboration solutions on the cloud to accommodate the secular change in work culture.”
As pandemic lockdowns have waned, the future of remote work has become a pressing question and Zoom’s competitors have launched hybrid work features in a race to accommodate the needs of companies. Last week, Microsoft unveiled design changes to its Teams platform to improve remote workers’ interactions.
Earlier this month, Alphabet’s Google revealed updates to its Workspace productivity suite, including new tools for its Meet videoconferencing system.
Goldman Sachs advised Zoom and Qatalyst Partners advised Five9. Rowan Trollope, chief executive of Five9, will become president of Zoom while running Five9 as an operating unit.
Zoom is taking advantage of a stunning stock rally to bankroll the acquisition of Five9. Its stock soared about five-fold during 2020 and has risen another 7.3 per cent this year, pushing its market value past $100bn.
The acquisition is the fourth deal by Zoom since the start of the pandemic. In June, Zoom announced without disclosing terms that it had signed a deal to acquire German start-up Karlsruhe Information Technology Solutions, or Kites, a translation software maker.
In March, Zoom was part of a group that acquired a minority stake in software company Assembled. In May 2020, it bought Keybase Financial Group, which makes a secure messaging and file-sharing service, for undisclosed terms.
As pandemic lockdowns have waned, the future of remote work has become a pressing question