Zoom in to buy Five9 in all-stock deal valued at $ 14.7 billion

Zoom, which started trading in public markets in 2019, has been one of the main beneficiaries of the shift to distance working and distance education. The value of the company’s shares has more than tripled since widespread lockdowns settled in the United States and elsewhere more than a year ago.

Over the past few months, Zoom has stepped up efforts to ensure it can continue to grow even after the effects of the pandemic have worn off and people return to the office and switch to hybrid work.

“The trend towards a hybrid workforce has accelerated over the past year, advancing the shift from contact centers to the cloud and increasing customer demand for personalized and personalized experiences,” said the Zoom’s chief executive, Eric Yuan, in a blog post announcing the transaction.

The deal is Zoom’s biggest acquisition ever. Last year it bought startup Keybase Inc. to help it develop end-to-end encryption capabilities for its video conferencing service, and last month it acquired translation software maker Kites GmbH.

Mr. Yuan said the deal for Five9 would help support the company’s Zoom Phone business, which replaces office phone systems with a cloud-based service.

Many businesses use contact centers, or call centers, to provide agents who answer customer questions. The cloud-based contact center market, which operates over the internet, has grown in popularity in recent years. Technology adoption accelerated during the pandemic, as many contact center staff worked remotely.

Other competitors in the industry include Amazon. the cloud division of com Inc., Genesys Telecommunications Laboratories Inc. and NICE inContact.

Zoom isn’t the only tech company using rising stock prices to fund a major acquisition. Business software vendor Salesforce.com Inc.

last year agreed to acquire Slack Technologies Inc.

for $ 27.7 billion in stock and cash – one of the most pronounced examples of a major player in the cloud computing race to bolster the pandemic’s remote work boom. Advanced micro-systems Inc.

last year agreed to buy rival chipmaker Xilinx Inc.

in a $ 35 billion stock deal.

Zoom’s revenue in the three months to April 30 jumped 191% from a year ago to around $ 956 million. Its shares have multiplied in value since last year, giving Zoom a market cap of $ 106.7 billion, according to FactSet.

Zoom primarily became known for providing its video conferencing services for free during the pandemic, but paid users have also grown dramatically as businesses move to connect with their employees and customers. Zoom ended the year with around 467,100 customers and more than 10 employees, nearly six times more than a year earlier.

As part of the deal, Five9 shareholders will receive 0.5533 Class A common shares of Zoom for each share of Five9 Inc. Zoom shares have grown over 46% over the past year, fueled by the increase in the number of users since the start of the pandemic.

“Joining forces with Zoom will provide Five9’s business customers with access to the best solutions, especially Zoom Phone, which will enable them to realize more value and deliver real results for their business,” Rowan said. Trollope, CEO of Five9.

Zoom said the boards of directors of both companies have approved the transaction, which is subject to the approval of Five9 shareholders. The deal is expected to close in the first half of 2022 and also requires approval from regulators, he said.

Once the transaction is completed, Five9 will be a business unit of Zoom. Mr. Trollope will remain in office and become President of Zoom, reporting to Mr. Yuan.

Write to PR Venkat at [email protected] and Newley Purnell at [email protected]