July 18 (Reuters) – Zoom Video Communications Inc (FROM MO) has agreed to purchase the cloud software provider Five9 Inc. (FIVN.O) in an all-stock deal valued at about $ 14.7 billion to target business customers looking to increase customer engagement, it said on Sunday.
The teleconferencing service provider has become a household name and investor darling in the year since the coronavirus pandemic as companies and schools launched its services for virtual courses, office meetings, and socializing.
The San Jose, California-based company is now shifting its focus to its two-year-old cloud calling product Zoom Phone and conference hosting product Zoom Rooms as its larger Facebook players (FB.O) and alphabet (GoogL.O) Google is stepping up its video products.
“The acquisition is designed to help improve Zoom’s presence with enterprise customers and enable it to accelerate its long-term growth opportunities by adding the $ 24 billion contact center market,” Zoom said in a statement.
The acquisition will complement Zoom Phone, an alternative to traditional phone offerings, by adding Five9’s business customers and combining contact center software to optimize customer interactions across all channels, she added.
Five9 will become an operating unit of Zoom and its CEO, Rowan Trollope, will become president of the company and head 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 shareholders will receive 0.5533 shares of Zoom Class A common stock for each share of Five9, she added.
Based on the July 16 closing price of Zoom’s Class A share, this equates to a price of $ 200.28 for each Five9 common share and an implied transaction value of approximately $ 14.7 billion.
Five9’s shares rose 0.6% to $ 177.60 on Friday, while Zoom rose 1.4% to $ 361.97, valuing the company at around $ 106 billion.
Zoom is up 45% over the past year as conference platforms, including that of Cisco Systems Inc (CSCO.O) Webex and Microsoft (MSFT.O) Teams have seen a surge in usage due to the coronavirus pandemic, which has triggered a seismic shift towards working, learning, and socializing online.
Global cloud conferencing spending is projected to hit $ 5.41 billion this year, up from $ 5.02 billion in 2020, according to technology consultancy Gartner. It doesn’t track market share, but analysts cite Zoom and Cisco as the market leader.
Reporting by Kanishka Singh in Bengaluru; Editing by Miyoung Kim, Clarence Fernandez, and Gerry Doyle
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