Zoom buying Five9 in $14.7B all-stock transaction

US & World

FILE – This April 18, 2019, file photo shows a sign for Zoom Video Communications ahead of the company’s Nasdaq IPO in New York. Videoconferencing service Zoom is buying cloud contact center provider FiveTh9 in an all-stock deal valued at about $14.7 billion. Zoom Video Communications Inc. founder and CEO Eric Yuan said in a blog post that the acquisition will allow the company to accelerate its long-term growth by adding the $24 billion contact center market. (AP Photo/Mark Lennihan, File)

Zoom, the videoconferencing company whose growth was supercharged by the pandemic over the past year, will buy the cloud call center company Five9 in an all-stock deal valued at about $14.7 billion.

That is far greater than Zoom’s market valuation a little over two years ago when it went public for slightly more than $9 billion.

Zoom founder and CEO Eric Yuan said in a blog post Sunday that the acquisition will accelerate the company’s long-term growth by adding the $24 billion contact center market. That will give Zoom greater exposure to more business clients. Yuan added that it also the deal also complements the Zoom Phone, a cloud phone system that is seeing strong demand.

The size of the deal would have seemed unthinkable when Zoom Video Communications Inc. went public in early 2019, before it became a household name. With the arrival of the pandemic and a global shift to working from home, Zoom is everywhere.

Its stock, which could be bought for less than $70 each at the start of 2020 just before the detection in the U.S. of COVID-19, is now worth five times that.

There was indications that Zoom might be in the hunt for acquisitions early this year that would accommodate more growth. In January, the company announced a secondary offering of shares that could raise up to $1.5 billion for, among other things, “acquisitions or strategic investments.”

Shares dipped almost 4% at the opening bell Monday, trading for $348.88.

Shareholders of Five9 Inc. stockholders will receive 0.5533 shares of Class A common stock of Zoom for each share of Five9. Based on Zoom’s closing price on Friday, this represents a per share price for Five9 common stock of $200.28.

Five9 will become a unit of Zoomonce the transaction closes. Rowan Trollope will become a president of Zoom and continue as Five9 CEO.

The deal is expected to close in the first half of 2022. It still needs approval from Five9 shareholders.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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