Zoom to Acquire Five9 for $14.7B

Video teleconferencing company Zoom Video Communications (ZM), recently announced that it has entered into an agreement to acquire intelligent cloud contact center services provider Five9 for $14.7 billion in an all-stock deal. The deal is likely to close in the first half of 2022.

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As per the terms of the deal, the shareholders of Five9 will receive 0.5533 shares of Class A common stock of Zoom for each share of Five9, which imputes a value of about $14.7 billion as per the closing share price of Zoom on July 16, 2021.

With this deal, Zoom is expected to gain a strong foothold in cloud-based contact center software market.

CEO of Zoom Eric S. Yuan said, “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. 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.” (See Zoom stock chart on TipRanks)

Recently, Robert W. Baird analyst William Power reiterated a Buy rating on the stock with a price target of $445. The analyst’s price target implies upside potential of 22.9% from current levels.

The Street is cautiously optimistic about the stock and has a Moderate Buy consensus based on 8 Buys and 11 Holds. The average Zoom price target of $421.33 implies that the stock has upside potential of 16.4% from current levels.

Zoom scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations. Shares have gained about 34.8% over the past year.