This development is a huge setback for Zoom, shining a light on concerns about its prospects for growth going forward — especially as more businesses return to offices.
Five9 Inc shareholders voted down on Thursday the call center software firm’s $14.7 billion sale to Zoom Video Communications Inc, scuttling what would have been the virtual conferencing giant’s biggest-ever acquisition.
The development comes after proxy advisory firm Institutional Shareholder Services earlier this month recommended Five9 shareholders vote against the deal, citing growth concerns.
“The agreement did not receive the requisite number of votes from Five9 shareholders to approve the merger with Zoom,” San Ramon, California-based Five9 said on Thursday.
“Five9 will continue to operate as a standalone publicly traded company.”
Zoom became a household name and an investor favorite in the year since the pandemic, as businesses and schools adopted its services to hold virtual classes and office meets.
But with rapid vaccination and life creeping back to normal, Zoom was looking to rake in revenue beyond its core video conferencing business that faces stiff competition from rivals Microsoft Corp, Cisco Systems Inc and Salesforce’s Slack.
Last week, analysts said the deal may be delayed by a U.S. Justice Department-led committee review but was unlikely to be scrapped.
A U.S. Justice Department-led committee was also reviewing Zoom’s proposed all-stock deal to buy Five9, according to a letter filed with U.S. regulators.
The Aug. 27 letter filed with the Federal Communications Commission said the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector was reviewing to see if the deal “poses a risk to the national security or law enforcement interests”.
Zoom’s connection with China has been scrutinized in recent years. In December, U.S. prosecutors charged a former China-based Zoom executive with disrupting video meetings commemorating the 31st anniversary of the Tiananmen Square crackdown at the request of the Chinese government.
Five9 presented an attractive means to bring to our customers an integrated contact center offering, Zoom CEO Eric Yuan said on Thursday.
“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,” Yuan added.
Five9 said it would continue the partnership with Zoom that was in place prior to the announcement.
Five9’s shares, which gained as much 19.3% since the deal was announced in July, fell 1.3% to $157.70 in extended trading.
Five9, whose call center software is used by more than 2,000 clients across the globe to interact with their clients, counts firms such as Under Armour, Lululemon Athletica Inc and Olympus Corp as customers.
(Reporting by Subrat Patnaik in Bengaluru; Additional reporting by Uday Sampath Kumar; Editing by Shounak Dasgupta)
This article was written by Subrat Patnaik from Reuters and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to [email protected].
Tags: virtual meetings, Zoom