Video source: YouTube, CNBC Television
Zoom Video Communications Inc (Nasdaq: Chart ZM - $68.54 0.03 (0.044%) ) announced Sunday it has agreed to acquire Five9 Inc (Nasdaq: Chart FIVN - $62.50 0.22 (0.351%) ), a cloud-based contact center service provider, in an all-stock transaction valuing the company at $14.7 billion.
Under the terms of the agreement, Five9 shareholders will receive 0.5533 shares of Zoom’s Class A common stock for each Five9 share. This represents a transaction value of $200.18 per share of Five9 stock based on the closing price of Zoom’s common stock on Friday, July 16.
After the transaction’s expected close during the first half of 2022, Five9 will become an operating unit of Zoom. Trollope will continue as Five9’s chief executive officer and become a president at Zoom, reporting to chief executive officer Eric Yuan.
Zoom, whose online conferencing services took off during the COVID-19 pandemic while people worked and attended school from home, has been looking to expand into an adjacent market that could bolster revenue as lockdowns end.
Yuan said, “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.”
"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," he said.
Launched in 2001, Five9 makes cloud-based software that uses artificial intelligence to power customer service centers. The company provides software to over 2,000 clients worldwide, including Citrix Systems, Lululemon Athletica and Under Armour, according to Bloomberg News.
In recent years, traditional call centers have largely been replaced or augmented by chat bots. The market for cloud-based customer service call centers is estimated at $24 billion, according to Zoom and Five9.
The two companies said the deal will enable them to compete with the likes of Amazon.com Inc, RingCentral Inc and Cisco Systems Inc, offering “significant” cross-selling opportunities in each other’s respective customer bases.
Rowan Trollope, Five9’s chief executive officer, said, “Joining forces with Zoom will provide Five9’s business customers access to best-of-breed solutions that will enable them to realize more value and deliver real results for their business. This, combined with Zoom’s ‘ease-of use’ philosophy and broad communication portfolio, will truly enable customers to engage via their preferred channel of choice.”
CNBC noted the deal also brings together two former Cisco executives — Yuan, who founded Zoom in 2011 and previously helped build WebEx, and Trollope, who became a senior vice president at Cisco after joining the company in 2012. He left in 2018 to take the CEO role at Five9.
Goldman Sachs & Co advised Zoom, while Qatalyst Partners advised Five9.
The deal is Zoom’s first ever billion-dollar acquisition and is the second-biggest US tech deal this year, after Microsoft Corporation’s announced $16 billion purchase of Nuance Communications, according to CNBC.
Source: Equities News