Zoom has agreed to buy Five9 for $14.7 billion -- a move that would provide Zoom with an on-ramp to the cloud contact center market.
Zoom announced the all-stock deal Monday, saying the acquisition would open a $24 billion market for its video conferencing and telephony services. Zoom expects to close the transaction in the first half of next year.
Contact centers have become a critical communication platform between companies and their customers. In a statement, Zoom CEO Eric Yuan said the acquisition would "accelerate Zoom's growth and play an even stronger role in driving the digital future, bringing companies and their customers closer together."
Rowan Trollope, Five9's CEO, said Zoom's "ease of use" philosophy jibes with his firm's mission to help businesses seamlessly engage with customers.
Without an acquisition like Five9, Zoom couldn't provide competitive contact center services without a partner, said Metrigy Research analyst Irwin Lazar. After completing the purchase, Zoom will compete with companies like 8x8, RingCentral, Cisco and Vonage.
Zeus Kerravala, the founder of ZK Research, said Zoom typically prefers to develop its products in-house, so he was surprised to see the company buy Five9 to address its contact center needs.
"I think they got a bit of a steal," he said. "Considering it was an all-stock deal, they didn't have to take any cash out of their coffers."
Once the deal closes, Five9 will become a unit of Zoom. Trollope will become a Zoom president while continuing to run Five9. He will report to Yuan.
Under the terms of the transaction, Five9 stockholders will receive 0.5533 shares of Class A stock in Zoom for each share of Five9 stock, valuing the deal at $14.7 billion. As of July 16, that would represent a price of $200.28 per share of Five9.
The Zoom and Five9 boards have approved the deal.
Mike Gleason is a reporter covering unified communications and collaboration tools. He previously covered communities in the MetroWest region of Massachusetts for the Milford Daily News, Walpole Times, Sharon Advocate and Medfield Press. He has also worked for newspapers in central Massachusetts and southwestern Vermont and served as a local editor for Patch. He can be found on Twitter at @MGleason_TT.