Five9 Shareholders Turn Down Zoom’s $14.7B Acquisition Plans

Zoom’s $14.7 billion acquisition of contact center solutions giant Five9 fell through this week after Five9 failed to get enough votes from shareholders to complete the formalities. The decision to call off the acquisition follows the intent of the U.S. Department of Justice to probe the acquisition. 

Video conferencing giant Zoom has announced the termination of a long-planned deal to acquire cloud-based software solutions provider Five9. The all-stock deal, through which Zoom was planning to enter the lucrative contact center market, was called off after Five9 shareholders decided against the agreement. 

Five9, in a statement, said the deal was “terminated by mutual agreement.” The contact center giant will continue standalone operations since the deal “did not receive the requisite number of votes” to approve the merger. The decision to call off the deal immediately came after the U.S. Department of Justice notified probing the $14.7 billion acquisition deal.

Five9 is based in San Ramon, California, while Zoom operates out of San Jose, California, and its development team primarily resides in China.

The deal caught the radar of U.S. agencies in August due to the potential threat to the U.S. because of Zoom’s deep ties with China. According to a letter from the U.S. Department of Justice (USDOJ) and the Committee for the Assessment of Foreign Participation in the U.S. Telecommunications Service Sector, the deal posed a potential risk to U.S. national security.

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“USDOJ believes that such risk may be raised by the foreign participation (including the foreign relationships and ownership) associated with the [acquisition], and a review by the Committee is necessary to assess and make an appropriate recommendation as to how the Commission should adjudicate this [acquisition],” the letter read.

Zoom’s CEO and founder Eric Yuan said in a separate announcement that, “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.”

“The contact center market remains a strategic priority for Zoom, and we are confident in our ability to capture its growth potential,” he stated.

Yuan observed that Zoom’s planned acquisition of Five9 “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. If one thing is certain here at Zoom, it is that we never rest on our laurels – we have the long-term vision, strategy, and team to continue delivering happiness and drive sustainable growth.”

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Between the acquisition chaos, both the companies were assured of continuing the partnership before the deal was discussed, including support for integrations between their Unified Communications as a Service (UCaaS) and Contact Center as a Service (CCaaS) solutions and joint go-to-market efforts.

“We also plan to maintain our long-standing partnerships with our valued contact center partners like Five9, Genesys, NICE inContact, Talkdesk, and Twilio to continue supporting our customers’ contact center of choice,” Yuan added.

The video conferencing giant, which accomplished a speedy growth rate amidst the pandemic, has come under pressure of late for various reasons. On the day of the announcement, Zoom’s shares traded at $360 each. It is now trading at around $267 per share. 

As the development was much anticipated with Zoom’s time-to-time updates on the deal, the news of the deal’s termination barely impacted the share prices of both companies. 

The planned acquisition created a path for Zoom to enter the untapped market and outgrow its current traditional area of expertise- enterprise videoconferencing. However, Five9, which focuses on customer experience, evaluated security risks being a customer-centric company.

With this deal’s cancellation, it will be interesting to see if the failure could blow away Zoom’s plan of launching a cloud-based video contact center which the company announced at its 2021 Zoomtopia conference in September.

Do you think the failed attempt to acquire Five9 could torpedo Zoom’s plan to enter the cloud center marker? Comment below or let us know on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We’d love to hear from you.