Zoom to pay US$14.7 billion to buy Five9 to shore up video calls as work-from-home becomes the new norm in age of the pandemic

Zoom will use its surging stock to pay for the deal, giving Five9 investors 0.5533 shares of its class A common stock

The target firm will become an operating unit of Zoom’s after the deal, which is subject to shareholder approval and slated to close in the first half of 2022

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A woman on a Zoom call. Photo:: Shutterstock

Published: 2:05pm, 19 Jul 2021Updated: 2:05pm, 19 Jul 2021

Zoom Video Communications has agreed to acquire Five9 for US$14.7 billion in its largest ever acquisition, targeting a call centre provider to bolster its popular videoconference app against stiffening competition.

Zoom will use its surging stock to pay for the deal, giving Five9 investors 0.5533 shares of its class A common stock under an agreement announced Sunday. The target firm will become an operating unit of Zoom’s after the deal, which is subject to shareholder approval and slated to close in the first half of 2022.

Zoom, a fixture of pandemic work-from-home and remote schooling, has been looking for ways to keep growing as workers in some countries return to the office and schools reopen. The acquisition could propel Zoom into a US$24 billion market for contact centers, the company said, helping it better compete with the likes of RingCentral and Amazon.com in letting clients provide customer service via the internet. One beneficiary could be Zoom Phone, a cloud-based calling service.

“We are continuously looking for ways to enhance our platform, and the addition of Five9 is a natural fit,” Zoom Chief Executive Officer Eric Yuan said in a statement.

Five9’s customers include big names like Under Armour, Citrix, Athena Health and Lululemon, according to its website, and the transaction is designed as a way for Zoom and Five9 to sell products to each others’ customers. Rowan Trollope, CEO of Five9, will become a president at Zoom while continuing to run Five9 as an operating unit. Goldman Sachs advised Zoom and Qatalyst Partners advised Five9.

Zoom rose to prominence after the pandemic hit in early 2020, becoming ubiquitous as people forced home by lockdowns used the service to connect remotely to work, school, friends and family. But investors have raised concerns this year about whether that growth will continue as vaccinations increase and shutdowns end.

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