Investors in San Ramon, California-based Five9 will get 0.5533 of a Zoom share for each of their holdings, implying a price of $200.28 each - a 12.8% premium to their Friday closing price and a 23x multiple to Five9's projected 2022 sales of $650 million.
The purchase expands Zoom's total addressable market, including individual and enterprise customers, by around $24 billion, according to both the companies and analysts. CEO Rowan Trollope will continue to run the group, which will be folded into Zoom's broader operations, and take on the title of company president.
“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 Yuan. “Zoom is built on a core belief that robust and reliable communications technology enables interactions that build greater empathy and trust, and we believe that holds particularly true for customer engagement."
"Enterprises communicate with their customers primarily through the contact center, and we believe this acquisition creates a leading customer engagement platform that will help redefine how companies of all sizes connect with their customers," he added. "We are thrilled to join forces with the Five9 team, and I look forward to welcoming them to the Zoom family.”
Zoom shares were marked 3.2% lower in early trading Monday to change hands at $350.42 each. Five9 shares, meanwhile, jumped 4.6% to $185.72 each.
"We believe Zoom was developing its own contact center solution internally, so Five9 accelerates a technology path Zoom was already on (and could result in some platform/R&D investment rationalization),' said Oppenheimer analyst Ittai Kidron. "We feel the decision to pursue M&A is a sign that Zoom recognized the development/GTM challenges ahead were significant and that it would benefit from an established technology/execution base to leverage."