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Zoom to Acquire Five9 for $14.7 Billion
On Sunday, July 18th, online video conference app Zoom announced its intention to acquire Five9, a cloud contact centre software provider. The all-stock transaction places Five9’s value at $14.7 billion and marks Zoom’s first billion-dollar acquisition.
The deal marks the second-biggest US tech deal of 2021, following Microsoft’s $16 billion acquisition of Nuance Communications. It also signifies that Zoom is preparing for a post-pandemic world, with employees returning to their offices, as it expands beyond its traditional video-conferencing services.
“We are continuously looking for ways to enhance our platform, and the addition of Five9 is a natural fit that will deliver even more happiness and value to our customers,” commented Eric Yuan, CEO of Zoom.
The Boom of Zoom
Over the past couple of years, Zoom became a household name as businesses and schools adapted to virtual classrooms and conferences. The pandemic saw Zoom become an investor favourite, with its revenue growing 326% in 2020.
But with global vaccination on the rise and restoration of what was once ‘normal’, Zoom is infiltrating new territories in an attempt to sustain its growth momentum. Reportedly, over the past year, the company has added several other services to its bundle, including a cloud phone system and an all-in-one communications appliance.
When Zoom made its debut on the stock exchange, it was valued at $9 billion. Since then, its shares have climbed over 450%.
The Future of Zoom
In a press release issued by Zoom, the company explains that the combination of Zoom’s robust communications platform with Five9’s intelligent cloud contact centre will enable organizations to reimagine the way they engage with their customers.
“Enterprises communicate with their customers primarily through the contact center, and we believe this acquisition creates a leading customer engagement platform that will help redefine how companies of all sizes connect with their customers. We are thrilled to join forces with the Five9 team, and I look forward to welcoming them to the Zoom family,” explained Eric Yuan, CEO of Zoom.
California-based Five9 offers cloud-based call centre operator services. With a client base that exceeds 2,000 customers, the company can count giants like Under Armour among them. Five9’s ability to process over 7 billion minutes of calls annually will be a huge advantage to Zoom’s $24 billion contact centre market.
The Deal
Reportedly, on Friday before the deal, Five9 closed with a market capitalization of $11.9 billion, with each share valued at $177.60. Five9 shareholders are expected to receive 0.5533 shares of Zoom Video Communications for every share of Five9. Based on those calculations, Five9’s value lands at $200.28 per share. In other words, Zoom is acquiring it at a 13% premium.
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