Zoom Aims To Boost Phone Presence Beyond Video As It Strikes $14.7B Deal To Acquire Five9

Zoom Video Communications Inc (NASDAQ: ZM) said on Sunday it is buying cloud-based contact center software provider Five9 Inc (NASDAQ: FIVN) for $14.7 billion in an all-stock deal that will help it boost its presence beyond video chat.

What Happened: Zoom’s first mega-billion acquisition will see Five9 shareholders receive 0.5533 shares of Class A common stock of Zoom for each share of Five9. 

This represents a $200.28 per share price for Five9 common stock or a transaction value of about $14.7 billion — a premium of 12.7% based on Friday’s closing price of Zoom Class A common stock.

The deal will help the San Jose, California-based video calling company expand offerings beyond video chat or Zoom Phone.“Joining forces with Zoom will provide Five9’s business customers access to best-of-breed solutions, particularly Zoom Phone, that will enable them to realize more value and deliver real results for their business,” Five9 CEO Rowan Trollope said in a joint statement.

Why It Matters: Zoom Phone is a cloud phone system that works on both iOS and Android devices and is designed for Zoom users who want to set up quick calls without video.

The combination also offers both companies significant cross-selling opportunities to each other’s respective customer bases, the companies said.

Cloud-based telephony companies such as Five9 and RingCentral Inc (NYSE: RNG) have got a boost from the pandemic as the segment has benefitted from rapid cloud adoption, helped by a shift towards work-location flexibility as corporates allowed employees to work from home.

Bigger rivals such as Microsoft Corp (NASDAQ: MSFT)-led Teams, and Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG)-owned Google Chat allow users to make calls via the apps downloaded on their phones.

Price Action: Zoom shares closed 1.45% higher at $361.97 on Friday and Five9 closed 0.58% higher at $177.60.

Photo: Courtesy of Zoom