Zoom’s $14.7 Billion Deal with Five9 Cancelled

Shareholders at cloud contact center software company Five9 have rejected a deal that would see the leading video conferencing company, Zoom Video Communications (NASDAQ: ZM), acquire the firm for $14.7 billion.

Earlier in June, Zoom had announced that it had completed an agreement with Five9 to acquire it for the aforementioned price. The deal would have been the company’s first billion-dollar purchase and it would have been one of the biggest tech deals made this year. However, recent indications from Five9 have shown that the deal is off the table.

Speaking on this development, Zoom’s CEO, Eric Yuan wrote in a blog post that acquiring the software company would have “presented an attractive means to bring to our customers an integrated contact center offering.” However, since the deal is now off, he declared that “it was in no way foundational to the success of our platform, nor was it the only way for us to offer our customers a compelling contact center solution.”

Zoom had hoped that in acquiring the firm, it was going to be able to reduce its dependence on its means of income which was the video and audio conferencing meetings that it has become synonymous with. This way, they believed that their addressable market was going to be able to rise to over $90 billion by 2025.

Reasons for Five9 Deal Cancelation

Five9’s decision to call off the acquisition is quite unusual considering the fact that Zoom, just last week, had reiterated that the deal was still expected to be finalized during the first half of 2022.

According to a press release issued by the firms, “The agreement did not receive the requisite number of votes from Five9 shareholders to approve the merger with Zoom.” Also, a letter was to the Federal Communications Commission raising concerns about foreign participation in the deal.

Also, a recent CNBC report had said that the Institutional Shareholder Services (ISS) had recommended that the shareholders of Five9 should vote against the acquisition of the firm by Zoom.

Another key reason for the decision could be the fact that the shareholders of the firm were expecting a higher premium on their shares considering the fact that Zoom has enjoyed a boom in its business during the coronavirus pandemic as physical contact became impossible.

Putting this into cognizance, Zoom’s share was trading for around $360 when the deal was announced, however, its current rate is around $260 as of press time. This means that Five9 shareholders would be receiving less of a premium than the agreed price which puts them at a disadvantage.