Zoom and Five9 abandon $14.7 billion acquisition

At the BoxWorks 2019 Conference, held at the Moscone Center in San Francisco, California, on Thursday, October 3, 2019, Zoom Video Communications Inc. founder and CEO Eric Yuan took the stage.

Michael Short | Getty Images | Bloomberg

In a joint statement Thursday, cloud contact centre and video calling software company Five9 and Zoom said they will not proceed with Zoom’s $14.7 billion acquisition of Five9.

According to a statement from the two companies, the acquisition of Five9 did not receive the necessary number of votes from its shareholders.

U.S. Department of Justice officials were concerned about the deal’s potential foreign participation, according to a letter sent to the FCC on Aug. 27. As a result of the review’s public disclosure last week, Zoom stated that it still expected the acquisition to close in the first half of 2022 at the latest

Zoom made its first attempt to spend more than $1 billion on a transaction when it announced its intent to buy Five9 in July.

While regulators have recently scuttled some large tech acquisitions, most notably in the semiconductor industry, it is extremely rare for companies to voluntarily terminate their agreement.

Zoom was set to pay a relatively low premium for Five9, which could have been a concern for investors. Only a 13% increase in the value of Five9’s stock would be received by shareholders at the agreed-upon price by way of dividends. Given the fervour surrounding cloud computing and the influx of capital into Five9’s competitors, a much higher premium was likely required to entice investors.

According to the statement, both companies will continue to support product integrations.

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It was reported with assistance from Ari Levy of CNBC.