Five9 Inc shareholders voted down the call centre software firm’s $14.7 billion sale to Zoom Video Communications Inc, a major blow to the video conferencing platform’s plan to expand its offerings following its pandemic boom.
The termination of what would have been Zoom’s biggest-ever acquisition comes after proxy advisory firm Institutional Shareholder Services and Glass Lewis recommended that Five9 shareholders vote against the takeover, citing growth concerns and dual-class shares.
Under the Zoom-Five9 deal terms announced in July, Five9 shareholders would have received 0.5533 Zoom shares for every Five9 share. The terms implied a 12.8% premium over Five9’s market price and valued the company at $14.7 billion. Since then, Zoom’s stock has dropped more than 25% as the virtual conferencing giant reported slower growth on its second-quarter earnings call.
“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 earlier this month.
San Ramon, California-based Five9 said the deal did not receive enough approval votes from shareholders, and it will continue to operate as a standalone publicly traded company.
Five9 presented an attractive means to bring to customers an integrated contact center offering, Zoom CEO Eric Yuan said 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,” he said.
The company said it would launch Zoom Video Engagement Center, its cloud-based contact center solution, in early 2022. Five9 said it would continue the partnership with Zoom that was in place prior to the announcement.
Zoom became a household name and an investor favourite as the pandemic clamped down on activity and businesses and schools adopted its services to hold virtual classes and office meetings.
But with rapid vaccination and life creeping back to normal, Zoom was looking for revenue sources beyond its core video conferencing business, which faces stiff competition from rivals Microsoft Corp, Cisco Systems Inc and Salesforce Inc’s Slack.
A US Justice Department-led committee had been reviewing Zoom’s proposed purchase of Five9 over possible national security concerns, according to a letter filed with US regulators, though analysts last week said the deal was unlikely to be scrapped as a result.
Zoom’s connection with China has been scrutinised in recent years.
Five9’s shares, which gained as much 19.3% since the deal was announced in July, fell 1.1% to $157.9 in extended trading on Thursday. Its call centre software is used by more than 2,000 clients across the globe, including Under Armour, Lululemon Athletica Inc. and Olympus Corp.
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