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Talk about a roller coaster ride.
Zoom, the video conferencing company that has become everyone’s primary way of communicating around work during the pandemic, will no longer buy Five9, a maker of cloud-based customer service software. While the all-inventory deal, announced in July, was intended to allow Zoom to tap into the lucrative contact center market, a few major setbacks along the way apparently led to today’s decision.
First, Zoom shares, which have moved almost in a straight line skyward over the past two years, have come under more pressure more recently, so the deal for Five9, which was valued at $ 14.7 billion dollars in July, would have been considerably lower today. . (On the day the deal was announced, Zoom’s shares were trading at around $ 360 each; they are now trading closer to $ 260 per share.)
It certainly didn’t help matters when Zoom revealed last week that a panel led by the US Department of Justice was investigating the reconciliation, fearing it could create national security risks given Zoom’s links. with China.
Founder Eric Yuan is a naturalized American citizen who was born in China and moved to the United States at the age of 27 in 1997. (Several years ago, we spoke with Yuan about the possibility of overcoming many obstacles to achieve this.)
Zoom also said last year that he mistakenly routed some meetings through servers in China and closed the account of an activist who was using the platform to commemorate China’s Tiananmen Square crackdown. . Subsequently, the company, which previously said that a significant portion of its development team is located in China (as is the case with many multinational companies), announced that it would not allow requests. of the Chinese government to reach anyone outside of mainland China.
Still, the figurative nail on the coffin could have been a recommendation two weeks ago from proxy advisory firm Institutional Shareholder Service that Five9 shareholders vote against the acquisition over concerns over Zoom’s slowing growth. .
That advice appears to have been heeded, with Five9 today issuing a press release stating that the merger plan had been “terminated by mutual agreement” between the two companies. Zoom separately released its own announcement, downplaying the importance of the broken deal.
Titled “What’s Next,” Yuan writes of Five9 that it “presented an attractive way to bring our customers an integrated contact center offering. Having said that, “he adds,” this was by no means essential to the success of our platform, nor was it the only way for us to offer our customers a clearinghouse solution. convincing contact. “
Either way, development was expected, of course. As news broke that the acquisition was canceled, Zoom and Five9’s stock prices barely budged.
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