In July, video conferencing mainstay Zoom announced that it was stepping into its first major acquisition buying cloud call centre service provider Five9 for $14.7-billion in an all-stock transaction. The deal was supposed to be finalised within “the first half of 2022.”
Now, CNBC reports that Zoom’s agreement with Five9 has fallen through after Five9’s shareholders rejected the deal. At the time, the acquisition was set to be the second-largest tech deal in 2021.
Five9’s shares fell 2% in extended trading following the statement from both companies.
According to Eric Yuan, Zoom’s founder and CEO, buying Five9 “presented an attractive means to bring to our customers an integrated contact center offering.” He continued in an official 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.”
Recently some large tech acqusitions, most notably in the semiconductor industry, have been denied by state regulators. It is extremely unusual for companies to willingly enter an agreement and then willingly terminate the agreement.
On 17 September, proxy advisory company Institutional Shareholder Services had recommended to Five9’s shareholders to vote down the proposal from Zoom. Ultimately, Five9’s shareholders were unsatifisfied with the small premium that Zoom was set to pay.
At the agreed upon price, shareholders of the cloud call centre provider were set to receive a 13% bump in the value of their shares over where they were trading prior to the agreement. Five9’s shareholders had been expecting a significantly higher premium given the current industry-wide shift into cloud software and all the capital investors had poured into Five9’s peers.
Since the deal was announced in July, Zoom’s stock has dropped 28% while Five9 shares have fallen only 11%, meaning that FIve9’s shareholders were set to receive an even smaller premium than the first agreed-upon price.