Zoom to buy cloud- based call centre

Zoom Video Communications announced a $14.7 billion allstock deal to buy cloud-based call centre operator Five9 Inc in its largest-ever acquisition, as competition intensifies in its core videoconferencing sector.

The teleconferencing services provider has become a household name and investor favourite in the year since the coronavirus pandemic, as businesses and schools adopted its services to hold virtual classes, office meets and to socialize.

The San Jose, Californiabased 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 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 centre market,” Zoom said in a statement.

The acquisition will complement Zoom Phone service, an alternative to legacy phone offerings, by adding Five9's business customers and combining its contact centre software to optimize customer interactions across channels, it added.

Five9's customers include Under Armour, Lululemon Athletica and Olympus Corp, according to its website.

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.

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.

Based on the July 16 closing share price of Zoom Class A common stock, this represents a price of $200.28 for each share of Five9 common stock, or nearly a 13 per cent premium, and an implied deal value of about $14.7 billion. Shares in Zoom, which went public in 2019, rose 1.4 per cent to $361.97 on Friday, valuing the company at around $106-billion.

Zoom rose 45 per cent over the past year, as conferencing platforms, which also include Cisco Systems' Webex and Microsoft Teams, have seen a surge in usage due to the coronavirus pandemic that has spurred a seismic shift to online working, learning and socializing.

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.

Goldman Sachs advised Zoom and Qatalyst Partners advised Five9.