Verizon Communications Inc. (Verizon) on Thursday, April 16, 2020, agreed to buy BlueJeans Network Inc. (BlueJeans) for less than $500 million to compete with the fast-growing video-conferencing rival, Zoom Video Communications Inc. (Zoom).
While several businesses have been completely devastated across the globe due to the Coronavirus pandemic, the video-call service providers became very popular since the virus outbreak forced office employees to work from home.
Verizon’s Buyout BlueJeans
It was reported the buyout deal between Verizon and BlueJeans was agreed less than the value worth previously. According to PitchBook Data, the US-based cloud-computing video conferencing service provider, Blue Jeans, which moved its headquarters to Santana Row in San Jose from Mountain View last year, was valued at more than $700 million when it raised funding in 2015.
When the telecom conglomerate group, Verizon made the buyout deal for less than $500 million to acquire the new-found popularity of video-conferencing apps provider, BlueJeans. According to a source, BlueJeans has about 15,000 enterprise clients and counts Facebook Inc. and Standard Chartered among its major customers.
BlueJeans had been in a partnership with Verizon in providing an app for meeting people offered to customers under the telecom company’s unified communications and collaboration services. An analyst at Piper Sandler, James Fish said, “Verizon got a good deal, but BlueJeans had been trying to sell itself for months.”
The Verizon and BlueJeans deal was aimed to boost competition against its rival Zoom, which has been recently gaining its popularity, as it has soared its daily active users to 200 million from about 10 million before the pandemic started to spread. With this surge of users, Zoom has reached its market valuation at $42 billion.
BlueJeans Needed More Capital
Globally, the spread of the new coronavirus has forced to find new ways of dealing business, which led to a surge in demand for video-conferencing apps such as Zoom, Cisco’s Webex, and Microsoft’s Teams.
Citing the new buyout deal was important for both, BlueJeans’ co-founder and Executive Chairman, Krish Ramakrishnan said the talk on the deal had been carried on during the last three months mainly using the company’s video-conferencing tool. He added, “This is the new norm,” referring to how the deal was made in a virtual setup that also included the use of e-signatures.
Ramakrishnan pointed out that BlueJeans needed more capital to increase its sales and marketing in the past and Verizon came to rescue. He explained, “In the last month, we have been growing, but we needed more capital to grow and it was better for our customers and our employees that we joined forces with Verizon.”
The buyout deal, which was first reported by the Wall Street Journal, is set to close in the second quarter that would be taking place under the guidance of Evercore and Goodwin Procter that were advising to BlueJeans, while Debevoise & Plimpton was advising to Verizon. Tami Erwin, a group CEO of Verizon Business, said that Verizon’s integration of BlueJeans would strengthen its 5G product plan, aiming to tap areas such as telemedicine and distance learning.
I’m Roshan, a journalist, blogger and music lover. I like covering global news related to finance, business and technology. Focusing on the collection of true and reliable information, I rely on working by conducting interviews with business leaders and talking to the inside sources of companies.
You can contact me: [email protected]