Zoom Set to Buy Cloud Software Vendor Five9 in a $14.7 Billion All-stock Deal

Zoom, one of the leading teleconferencing service providers, announced that it has landed a deal to acquire Five9. The company said that the deal is an all-stock transaction that is valued at $14.7 billion by both parties. 

As a result, Five9 will now become an operating unit of Zoom. Rowan Trollope, Chief Executive, Five9 is on course to become a president of Zoom and continue as the head of the unit once the deal is through. 

Zoom revealed that the major stakeholders from both companies have given the transaction a green signal. As things stand, the deal is expected to close in the first half of 2022 after the regulators approve it. 

SEE ALSO: The Biggest Tech Mergers & Acquisitions in 2021 So Far

How does this deal help Zoom?

Zoom’s share prices have increased consistently over the past few months. The company intends to make the most of this trend by securing its future growth with the acquisition of  Five9. 

The deal will allow Zoom to expand its product portfolio for enterprise and business clients. Besides, this opportunity enables the company to knock on the doors of the $24 billion contact-center market.

The acquisition of Five9 will offer Five9’s business customers complete access to advanced and top-notch solutions such as Zoom Phone. 

COVID-19 pandemic – Impact on Zoom’s Growth

Zoom began trading in public markets in 2019. Although the world economy took a tumble due to the ongoing pandemic, it was a blessing in disguise for Zoom. 

The company was one of the most notable beneficiaries of online schooling and remote working. Since the first quarter of 2020, the value of Zoom’s shares has tripled due to the rising trend toward remote learning and working. 

Apart from the number of free users, Zoom’s paying customers have also grown at an impressive rate. 

Against the backdrop of this trend, Zoom has increased its efforts to ensure its growth even after the pandemic. 

Zoom’s Chief Executive, Eric Yuan, said that the shift toward a hybrid workforce has surged over the past year. As a result, contact centers have made the switch to the cloud to cater to the ever-rising demand for personalized and tailored experiences. 

Rising adoption of cloud-based conferencing 

Investments and consumer spending on cloud-based conferencing have moved in the upward direction over the past couple of years. 

In fact, according to a Gartner report, the global end-user spending on cloud web conferencing solutions will increase by around 24.3% in 2020 [1]. 

The advent of the pandemic has certainly fueled the demand for cloud-based solutions including teleconferencing. As a result, many companies are eyeing mergers and acquisitions to expand their presence in the market. 

SEE ALSO: Hewlett Packard Enterprise (HPE) Acquires Ampool to Strengthen It’s Ezmeral Platform

Image Source: Zoom

Source:

[1] (2020) “Gartner Says Worldwide End-User Spending on Cloud-Based Web Conferencing Solutions Will Grow Nearly 25% in 2020” Gartner [online] Available from: https://www.gartner.com/en/newsroom/press-releases/2020-06-02-gartner-says-worldwide-end-user-spending-on-cloud-based-web-conferencing-solutions-will-grow-nearly-25-percent-in-2020 [accessed July 2021]

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