Zoom’s agreement to buy cloud contact center software company Five9 was scuttled on Thursday, after Five9 shareholders rejected the deal.
Zoom said in July that it was acquiring Five9 in an all-stock purchase for $14.7 billion, its first billion-dollar-plus purchase and, at the time, the second-biggest tech deal of the year. The company has now lost an opportunity to quickly broaden its capabilities after its stock rallied during the coronavirus pandemic.
Buying Five9 “presented an attractive means to bring to our customers an integrated contact center offering,” Eric Yuan, Zoom’s founder and CEO, 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.”
A branch of the US Department of Justice was reviewing the deal out of concern about potential foreign participation, according to a letter dated Aug. 27 that was sent to the Federal Communications Commission. But Zoom said last week, when news of the review was reported, that it still expected the deal to close in the first half of 2022.
While some large tech acquisitions, most notably in the semiconductor industry, have been nixed of late by regulators, it’s highly unusual for companies to willingly terminate their own deal.
Proxy advisory company Institutional Shareholder Services had recommended shareholders vote down the proposal, CNBC reported Sept. 17.
Zoom went public just two years ago, and the pandemic provided a major boon to its business, as customers rushed to sign up for its video chat software. The company had $1.9 billion in cash and equivalents on its balance sheet at the end of July.
Five9 also picked up customers that needed to set up remote and distributed call centers.
Five9 shareholders were ultimately unsatisfied with the small premium that Zoom was set to pay. At the agreed-upon price, they were only going to receive a 13% bump in the value of their shares over where they were trading prior to the agreement. Given the momentum in cloud software and all the money investors have poured into Five9′s peers, a significantly higher premium was likely expected.
Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.
Featured News
Lawmaker Probes FTC and EU’s Role in Amazon’s Failed iRobot Acquisition
May 2, 2024 by
CPI
FTC to Approve Exxon’s $64 Billion Deal with Pioneer Resources, Excludes
May 1, 2024 by
CPI
UK Competition Watchdog Raises Alarm Over Nvidia’s ARM Takeover
May 1, 2024 by
CPI
Sen. Klobuchar Urges Regulators to Probe Collusion in Healthcare Pricing
May 1, 2024 by
CPI
Multiple States Join Tennessee’s Antitrust Lawsuit Against NCAA Over NIL Rules
May 1, 2024 by
CPI
Antitrust Mix by CPI
Antitrust Chronicle® – Economics of Criminal Antitrust
Apr 19, 2024 by
CPI
Navigating Economic Expert Work in Criminal Antitrust Litigation
Apr 19, 2024 by
CPI
The Increased Importance of Economics in Cartel Cases
Apr 19, 2024 by
CPI
A Law and Economics Analysis of the Antitrust Treatment of Physician Collective Price Agreements
Apr 19, 2024 by
CPI
Information Exchange In Criminal Antitrust Cases: How Economic Testimony Can Tip The Scales
Apr 19, 2024 by
CPI