Zoom Video Communications said on Sunday that it has agreed to acquire cloud software provider Five9 in an all-stock transaction valued at approximately US$14.7 billion (approximately Rs 10989 crore) to target corporate customers who want to increase customer engagement.

Since the coronavirus pandemic, this conference call service provider has become a household name and a favorite of investors as businesses and schools use its services to host virtual classes, office gatherings, and social events.

The San Jose, California-based company is now shifting its focus to its two-year-old cloud calling product Zoom Phone and conference hosting product Zoom Rooms, as larger players from Facebook and Alphabet’s Google are expanding their videos product.

“This acquisition is expected to help increase Zoom’s influence among corporate customers and accelerate its long-term growth opportunities by adding USD 24 billion (approximately Rs 1,794,420 crore) to the contact center market,” Zoom said in a statement Said.

It added that the acquisition will complement the Zoom Phone service, which is an alternative to traditional phone products, by increasing Five9’s commercial customers and combining its contact center software to optimize customer interactions across channels.

Five9 will become an operating division of Zoom, and its CEO Rowan Trollope will become the company’s president and continue to be the head of the division after the transaction is completed. The transaction is expected to be completed in the first half of 2022.

It added that under the agreement approved by the boards of the two companies, Five9 shareholders will receive 0.5533 shares of Zoom A common stock per Five9.

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According to the closing price of Zoom A common stock on July 16, this represents the price of Five9 common stock at US$200.28 (approximately Rs 14,970), and the implied transaction value is approximately US$14.7 billion (approximately Rs 1,09,890 crore). .

Five9’s share price rose 0.6% on Friday to US$177.60 (approximately Rs 13,270), while Zoom rose 1.4% to US$361.97 (approximately Rs 27,060), and the company was valued at approximately US$106 billion (approximately Rs 7,920).

Zoom has risen 45% in the past year because of the surge in usage of meeting platforms including Cisco’s Webex and Microsoft Teams, which is due to the coronavirus pandemic that has triggered a huge shift to online work, study, and socialization.

According to data from the technology consulting company Gartner, global cloud-based conference spending this year is expected to reach 5.41 billion U.S. dollars (approximately 4044 billion rupees), up from 5.02 billion U.S. dollars (approximately 375.3 billion rupees) in 2020. It does not track market share, but analysts list Zoom and Cisco as leaders.

© Thomson Reuters 2021