Five9 Shareholders Scotch $14B Sale to Zoom

The deal would have been Zoom's biggest move yet to expand beyond its core videoconferencing business.
Matthew HellerOctober 1, 2021

Five9 shareholders have rejected the $14.7 billion sale of the call center software firm to Zoom Video Communications, forcing the companies to abandon a deal that would have enabled Zoom to expand beyond its remote conferencing business.

The demise of the all-stock deal came after proxy advisory firms Institutional Shareholder Services  (ISS) and Glass Lewis recommended earlier this month that Five9 shareholders vote against it, citing concerns about Zoom’s slowing growth as workers return to in-person meetings.

The merger agreement “has been terminated by mutual agreement,” the companies announced Thursday in a new release. “The agreement did not receive the requisite number of votes from Five9 shareholders to approve the merger with Zoom.”

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The deal would have been Zoom’s biggest move yet to expand after experiencing meteoric growth during the pandemic. The Five9 Intelligent Cloud Contact Center offers digital engagement, analytics, workflow automation, workforce optimization, and practical AI to more than 2,000 customers worldwide.

Five9 “presented an attractive means to bring to our customers an integrated contact center offering,” Zoom CEO Eric Yuan wrote in a blog post. “That said, 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.”

Five9 stockholders would have received 0.5533 shares of Class A common stock of Zoom for each share of Five9, representing a premium of 13% to the undisturbed price of Five9 shares. But since the deal was announced in July, Zoom’s stock has dropped 28%

“The all-stock deal exposes FIVN shareholders to a more volatile stock whose growth prospects have become less compelling as society inches towards a post-pandemic environment,” ISS said in its report.

As Reuters reports, Zoom’s core videoconferencing business faces stiff competition from Microsoft, Cisco Systems, and Salesforce’s Slack.

But Rishi Jaluria, an analyst with RBC Capital Markets, noted that Zoom continues to move toward becoming a broader enterprise communication and collaboration platform, as seen with the success of Zoom Phone. “I think Zoom would have benefited from Five9, but I don’t think they desperately needed it,” he said.

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