Zoom is buying Five9 for $14.7 billion

On Sunday, Zoom announced that it’s planning to buy Five9, a cloud contact centre provider, for $14.7 billion.

The deal represents the company’s first billion-dollar acquisition. It also comes as the company is getting prepared for a post-pandemic life with its employees returning to the office. According to FactSet, it is considered the second-biggest U.S. tech deal for this year, behind Microsoft’s planned purchase of Nuance Communications.

Zoom CEO Eric Yuan in a press release, said that they continuously see ways to enhance their platform. With all of the development, Five9 will be a natural fit that will deliver even more value to their customers.

Overview

On Friday, Five9 closed with a market cap of $11.8 billion, or $177.61 per share. Zoom announced that Five9 stockholders would receive 0.5534 shares of Zoom Video Communications for every share. That gives a value of $200.29 per share to Five9. It also gets at a 14% premium and represents approximately 15% of Zoom’s market cap of close to $108 billion.

Zoom received the top growth in the 16 months after the Covid-19 pandemic. It caused a shutdown of offices worldwide, forcing workers in retail, finance, tech and government offices to communicate remotely.

After expanding revenue by 327% in 2020, Zoom started to face a slowdown, especially as companies reopen and continue face-to-face meetings. While the company has launched new products to evaluate coming changes to its business, organic growth alone is less likely to satisfy Wall Street.

Zoom’s stock price increased by almost 400% last year. However, it experienced a drop of 35% since reaching its peak.

Five9 experienced growth after 2020, as demand grew for call centre technology that could allow representatives to do their jobs from home. Companies had to quickly modify to cloud software of all kinds, including for their contact centres.