Five9 and Zoom Terminate $14.7 Billion Acquisition Deal

Key Takeaways:

  • Five9 shareholders did not accept Zoom’s $14.7 billion all-stock offer to acquire the company. 
  • Regulators with doubts regarding foreign participation were evaluating the planned deal. 

This story has been nothing short of a rollercoaster ride.

Zoom’s agreement to acquire Five9, a cloud contact center software hit a dead end on Thursday after Five9 shareholders rejected the deal. 

In July, Zoom had announced that it is acquiring Five9 in an all-stock purchase for $14.7 billion. It was not only going to be the company’s first billion-dollar-plus acquisition but also the second-largest tech deal of the year. However, it seems that the company has lost the opportunity to expand its capabilities after the value of its stock took a hit during the ongoing pandemic. 

SEE ALSO: Zoom Set to Buy Cloud Software Vendor Five9 in a $14.7 Billion All-stock Deal

What Went Wrong?

Although the all-stock deal was announced in July, a few unexpected roadblocks along the way led to this decision today. The value of Zoom’s shares has moved in an upward trajectory over the last couple of years. However, more recently, they have come under significant pressure. 

This means that the value of the deal, which was around $14.7 billion in July has gone down significantly. To put that in perspective, when Zoom announced the deal, its shares were trading at around $360 each. Today, they are trading at $260 per share. 

Five9 shareholders were not satisfied with the modest premium that Zoom was willing to pay. At the time of the agreement, the shareholders were likely to get a 13% rise in the value of their shares. 

Apart from the economic aspect, another news had a negative impact on this deal. Last week, Zoom said that the U.S. Justice Department-led panel has been probing the tie-up due to increasing concerns that it could create a national security risk due to Zoom’s ties to China. 

In the past, some tech deals, particularly in the semiconductor industry have been affected by regulators. However, it is very unusual for companies to abandon their own deal. 

More about Zoom

Zoom went public in 2019, and the arrival of the pandemic provided a major boost to its business. 2020 saw exponential growth in the number of customers using video chat software.

SEE ALSO: Adobe Inks Deal to Buy Frame.io for $1.3 Billion

Feature Image Source: Zoom

Karandeep V

Karandeep was born in Pune, Maharashtra, an upcoming metropolitan city in the Western region of India. While most members of his family are engineers, he had different ideas. He was more inclined toward exploring the non-technical aspects of a business, which is why he studied Bachelors of Business Administration at Symbiosis International University, Pune.  Having said that, his love for new and upcoming technologies remained intact, which is why he has written extensively about technology throughout his career. After a brief stint with a gaming company at the beginning of his career, he discovered that his love for writing was not temporary.  Being a tech geek, he always liked installing and playing around with new applications on his mobile devices and the home desktop. He was fascinated by how technology can simplify even the most mundane and complex tasks with just a few commands. He keeps a close eye on how businesses use different tools to streamline their operations to boost productivity and efficiency.  At ToolsMetric, he writes product reviews that cover the main features and specifications of different enterprise applications. The sheer amount of innovation and hard work that goes into building these tech solutions is one of the reasons why Karandeep loves reviewing these tools. Besides product reviews, he also writes interesting news articles and blogs that track the latest developments in the tech industry.  When he is not writing, you can find him rooted to his seat playing video games, watching movies, or supporting his favorite football team. Since his childhood, he has always loved to travel and explore new places. Traveling is a major part of his life due to a myriad of reasons such as experiencing new cultures, food, and traditions. His other hobbies include playing football, cooking, and running.  You can find him on LinkedIn here.

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