Zoom Video Communications has agreed to buy cloud software provider Five9 in an all-stock deal worth about $14.7 billion (roughly Rs. 1,09,890 crores) to target business clients looking to boost customer engagement, it said on Sunday.
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 socialise.
The San Jose, California-based 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 Alphabet's 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 (roughly Rs. 1,79,420 crores) contact center 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 optimise customer interactions across channels, it added.
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, it added.
Based on the July 16 closing share price of Zoom Class A common stock, this represents a price of $200.28 (roughly Rs. 14,970) for each share of Five9 common stock, and an implied deal value of about $14.7 billion (roughly Rs. 1,09,890 crores).
Shares in Five9 finished up 0.6 percent at $177.60 (roughly Rs. 13,270) on Friday, while Zoom rose 1.4 percent at $361.97 (roughly Rs. 27,060), valuing the company at around $106 billion (roughly Rs. 7,92,450 crores).
Zoom rose 45 percent over the past year, as conferencing platforms, which also include Cisco's 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 socialising.
Global spending on cloud-based conferencing is forecast to reach $5.41 billion (roughly Rs. 40,440 crores) this year, up from $5.02 billion (roughly Rs. 37,530 crores) in 2020, according to tech consultancy Gartner. It does not track market share, but analysts cite Zoom and Cisco as the leaders.
© Thomson Reuters 2021