- A new SEC filing on Zoom's $14.7 billion Five9 purchase shows it had to compete with another firm.
- RBC analysts believe the other firm was Salesforce, a logical fit for Five9's contact-center tech.
- If that's true, it may mean Salesforce wants to buy contact-center or customer-engagement firms.
In July, Zoom announced its intention to buy Five9, a provider of cloud-contact-center software, for $14.7 billion, in its biggest acquisition to date.
A new filing with the Securities and Exchange Commission on Monday showed that Zoom had competition for the deal. And while Zoom didn't disclose which other company it might have been — referring to it only as "Company A" — analysts at RBC said in a research note that they believed it was Salesforce, the $242 billion cloud-software giant.
A spokesperson for Salesforce said the company didn't "comment on rumors or speculation." But in that filing, Zoom reported to the SEC that Five9 CEO Rowan Trollope was approached earlier in the summer by Company A, which said it was interested in "an 'at market' stock transaction with Five9." At the time, Five9 was valued at about $12 billion.
But in later discussions, the CEO of that company "noted that it would take several months before Company A would be in position to enter into such a transaction," the proxy said. Discussions with the other interested company ended after Five9's board and management team decided that the proposal and its level of interest in a transaction "were not sufficiently compelling." This resulted in Five9 ultimately going ahead with its deal with Zoom.
In a note to clients, the RBC analysts pointed out that Salesforce's massive $27.7 billion purchase of Slack had not yet closed when the deal between Zoom and Five9 was publicly announced. Under those circumstances, it would have been difficult for Salesforce to buy a company of Five9's scale right away.
The analysts also said Salesforce generally preferred to pay for acquisitions in stock, which reinforced their belief of the cloud titan's involvement — not to mention that Five9's software would fit right into Salesforce's portfolio of marketing and customer-engagement tools.
"We believe Company A is Salesforce given the all-stock nature of the deal, the pending WORK acquisition, and how FIVN would fit into the broader Salesforce suite," Rishi Jaluria, an RBC analyst, wrote.
From RBC's perspective, the notion that Salesforce was looking to buy Five9 is a signal that the company is interested in pursuing larger acquisitions, even so soon after the Slack deal closed. Furthermore, it hints that those acquisitions might be in the contact center or larger customer-engagement space.
Rebecca Wettemann, a Valoir analyst, noted that Salesforce already has Service Cloud, a robust offering for customer-service agents that helps them communicate with customers just about every which way — with the exception of voice, which it leaves to partners like Amazon Web Services.
Adding a fully fledged contact-center platform like Five9 would have given it a wholly owned alternative that could help it capitalize on a larger pandemic-driven push for virtual contact centers.
"The contact-center market is hot," Wettemann said. "Not just because Zoom acquired Five9, but because with the move from in-person to digital, that is not going away, everyone's looking at, how do they modernize their contact center?"
Other contact-center companies named by Wettemann as prospective Salesforce acquisitions include Genesys, Nice, and Talkdesk. Of note, Talkdesk has received funding from Salesforce's venture-capital arm. Salesforce has been known to acquire startups from its portfolio.
In the bigger picture, RBC's Jaluria said that while contact-center software was one space Salesforce could be looking at, he thought it might be looking more broadly at any kind of customer-engagement tools.
Ultimately, Jaluria takes Salesforce's likely involvement in the Five9 deal as an indication that Salesforce is always looking to grow through mergers and acquisitions.
"That's an ongoing thing in their business model," Jaluria said. "They'll have multiple projects ongoing at the same time. I think it's just more about the right asset at the right time."
Do you work at Salesforce, Zoom, or Five9? Contact this reporter via email at pzaveri@businessinsider.com or Signal at 925-364-4258. (PR pitches by email only, please.)
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