Five9 shareholders turn down Zoom's $14.7 billion acquisition deal

Key Points

• Five9 shareholders turned down Zoom’s acquisition proposal

• In July, Zoom offered $14.7 billion to acquire Five9

• Earlier this month, Institutional Shareholder Services published a note advising Five9’s shareholders to terminate the deal citing growth concerns and dual-class shares

Call center software developer Five9 Inc on Thursday said its shareholders voted down Zoom Video Communications Inc’s $14.7 billion acquisition proposal, giving a major blow to the video conferencing software firm’s plan to expand its offerings following its pandemic boom.

The termination of the deal comes after proxy advisory firm Institutional Shareholder Services (ISS)and Glass Lewis earlier this month recommended that Five9 shareholders vote against the proposal, citing growth concerns and dual-class shares.

Deal agreement

In July, Zoom approached Five9 with the acquisition proposal. As part of the agreement, Five9 stockholders would have received 0.5533 shares of Zoom for each share of Five9, which was about $200.28 for each share, or nearly a 13% premium.

Since then, Zoom’s stock has dropped over 25% as the virtual conferencing giant reported slower growth on its second-quarter earnings call.

“The all-stock deal exposes FIVN shareholders to a more volatile stock whose growth prospects have become less compelling as society inches towards a post-pandemic environment,” ISS said in the note.

Potential prospect

California-based Five9, whose software is used by more than 2,000 clients across the globe, including companies like Under Armour, Lululemon Athletica Inc, and Olympus Corp, said the agreement did not receive enough approval votes from its shareholders and will continue operating as a standalone publicly-traded company.

Five9 said it would continue the partnership with Zoom that was in place before the announcement, which includes support for integrations between their different enterprise solutions and joint go-to-market efforts.

Zoom earlier said, “The acquisition is expected to help enhance Zoom’s presence with enterprise customers and allow it to accelerate its long-term growth opportunity by adding the $24-billion contact center market.”

If approved, the deal would have been Zoom’s strategic and biggest acquisition and would help accelerate the business portfolio outside of its core offering after facing stiff competition from Microsoft Corp, Cisco Systems Inc, and Salesforce’s Slack.

Picture Credit: Investor Telegraph