NEW YORK: Zoom Video Communications agreed to acquire Five9 for $14.7 billion in its largest-ever acquisition, 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 under an agreement announced Sunday. The target firm will become an operating unit of Zoom’s after the deal, which is subject to shareholder approval and slated to close in the first half of 2022, report agencies.
“We are continuously looking for ways to enhance our platform, and the addition of Five9 is a natural fit,” Zoom chief executive Eric Yuan said.
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 (UC&C) 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. “That’s because 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 companies’ needs. Last week, Microsoft unveiled design changes to its Teams platform to improve remote workers’ interactions in meetings. 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 continuing to run 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 in the year to date, pushing its market value past $100bn.