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Zoom set to buy cloud software provider Five9 in $15 billion deal

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Teleconferencing services provider Zoom Video Communications Inc has struck a deal to buy cloud software provider Five9 Inc in an all-stock transaction valued at about $14.7 billion, the company said on Sunday.

The deal marks Zoom’s first billion-dollar acquisition and comes as the company prepares for a post-pandemic world with employees now gradually returning back to the office culture.

“We are continuously looking for ways to enhance our platform, and the addition of Five9 is a natural fit that will deliver even more happiness and value to our customers,” said Zoom CEO Eric S. Yuan in a press release.

Zoom’s acquisition of Five9 is complementary to the growing popularity of its Zoom Phone offering. Zoom Phone is a modern, cloud phone system that offers a digital alternative to legacy phone offerings, enabling organizations to connect and interact in new and convenient ways to keep businesses moving.

The combination also offers both companies significant cross-selling opportunities to each other’s respective customer bases. As a result of the acquisition, Zoom will play an even greater role in driving the digital future and bringing companies and their customers closer together

Five9 will become an operating unit of Zoom and its chief executive, Rowan Trollope, will become a president of Zoom and stay on as chief of the unit after the deal, which is expected to close in the first half of 2022. Also, under the pact, approved by the boards of both companies, Five9 stockholders will receive 0.5533 shares of Class A common stock of Zoom for each share of Five9.

Based on the July 16 closing share price of Zoom Class A common stock, this represents a price of $200.28 for each share of Five9 common stock and an implied deal value of about $14.7 billion.

Zoom has become a household name and investor favorite in the year since the coronavirus pandemic, as businesses and schools adopted its services to hold virtual classes, office meets, and socialize and has been among the best growth stories as Covid-19 caused a sudden shutdown of offices across the globe, forcing workers to communicate from remote locations.

Goldman Sachs & Co. LLC is serving as exclusive financial advisor and Cooley LLP is serving as legal counsel to Zoom. Qatalyst Partners is serving as exclusive financial advisor and Latham and Watkins LLP is serving as legal counsel to Five9.

Zoom’s stock price has jumped almost 400%  in the past twelve months.

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