Zoom and Five9 Cancel $14.7B Acquisition
Zoom will no longer acquire Five9 after the cloud contact center’s shareholders rejected the $14.7 billion all-stock offer. The stock prices of both companies barely moved, suggesting Wall Street expected the two-month-old deal to dissolve this week.
Zoom made a bid for Five9 to incorporate its enterprise digital contact center into its communication suite, including the AI call center agents Five9 picked up from Inference Solutions in late 2020. But, financial and public relations shifts since then seemed to be enough for Five9’s stockholders to rethink the whole deal. Zoom’s stock value drop likely played an outsize role in the decision. The $14.7 billion value of the deal was based on Zoom’s approximately $360 stock price when the deal was announced. The stock has fallen by about $100 since then, reducing the amount shareholders would get by a significant fraction. The growth slowdown prompted the Institutional Shareholder Service proxy advisory firm to tell Five9’s shareholders to vote against the deal, advice they immediately followed.
“Five9 has built an industry-leading and differentiated cloud contact center platform that has transformed the way businesses engage with their customers. Over the past few months, we have continued to execute relentlessly in the market,” Five9 CEO Rowan Trollope said. “The contact center is the new front door for business and, as the market shifts from on-premises to cloud and digital transformation accelerates, we believe we are positioned to build on this momentum and grow market share.”
Zoom had been looking to Five9 to reduce its dependence on the video and audio meetings that have become so popular within businesses and other organizations. The deal might have failed even if Zoom were growing at the rate it did when the COVID-19 pandemic was at its peak. The U.S. Justice Department had begun examining the acquisition over national security concerns related to China. Zoom was already in some hot water after rerouting some of its meetings through Chinese servers by accident and shutting down the account of an activist commemorating the Tiananmen Square crackdown. Regardless, it’s clear that Zoom and its digital communications rivals are keen to get into the contact center space as much as possible and to pay a very high price for the chance.
“While we were excited about the benefits this transaction would bring to both Zoom and Five9 stakeholders, including the long-term potential for both sets of shareholders, financial discipline is foundational to our strategy,” Zoom CEO Eric Yuan said in a statement. “The contact center market remains a strategic priority for Zoom, and we are confident in our ability to capture its growth potential.”