The largest takeover in Zoom’s history fell through due to the company’s dim prospects
Five9 Inc ( FIVN) shareholders voted against the $ 14.7 billion sales of the company to Zoom Video Communications Inc (ZM), a significant blow to Zoom’s plans to expand its business.
The collapse of Zoom’s largest acquisition in history comes after consulting firm Institutional Shareholder Services (ISS) earlier this month recommended that Five9 shareholders vote against the deal, citing growth concerns and dual-class stocks. Under the terms of the takeover announced in July, owners of Five9’s assets would receive 0.5533 Zoom shares for every Five9 share.
The terms also included a 12.8% premium at Five9’s market price and were valued at $ 14.7 billion. Since then, Zoom’s assets have plummeted more than 25% as the virtual conferencing giant reported slow earnings growth in the second quarter. “The deal exposes Five9 to greater volatility, whose growth prospects diminish as society recovers from the pandemic,” the ISS said in a report earlier this month.
As a result, the merger agreement did not receive enough votes, and the project will continue to operate as a separate public company. “Five9 would be great for expanding the capabilities of our application. However, canceling the deal will not affect our users or our plans to improve Zoom,” said Zoom CEO Eric Yuan. The company said it will launch its cloud-based Zoom Video Engagement Center solution in early 2022.
At the same time, Five9 will continue the partnership with Zoom, which existed before the recent events. Zoom has become one of those companies whose business has taken off in the face of the pandemic, as it curbed activity, forcing businesses and schools to move to virtual meetings. However, with the advent of vaccines and a return to business as usual, the app has had to look for revenue streams outside of its core video conferencing company, which is already facing stiff competition from Microsoft, Cisco, and Salesforce.
A committee chaired by the US Department of Justice was looking into the Zoom and Five9 deal due to possible national security concerns. In addition, zoom’s ties to China have been under scrutiny from Washington in recent years. Five9, up 19.3% since the deal in July, fell 1.1% to $ 157.9 in currency trading.
