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

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