Zoom's $14.7B Deal To Acquire Five9 Falls Through

Five9 Inc FIVN shareholders on Thursday shot down Zoom Video Communications Inc’s ZM $14.7 billion deal to acquire the customer-service software company.

What Happened: The deal failed to secure enough votes from Five9 shareholders and the two companies said the merger plan had been terminated by “mutual agreement”. 

See Also: Zoom Aims To Boost Phone Presence Beyond Video As It Strikes $14.7B Deal To Acquire Five9

Five9 investors voted against the all-stock deal amid concerns about Zoom’s growth.

Zoom CEO Eric Yuan said the video calling company was “excited” about the potential deal but “financial discipline is foundational to our strategy.” Yuan noted the cloud-based contact center solution Zoomtopia will launch in early 2022.

"Five9...presented an attractive means to bring to our customers an integrated contact center offering," the Zoom CEO noted. "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."

Why It Matters: The deal was also being investigated by a U.S. Department of Justice-led panel over Zoom's ties with China, which were being seen as a national security concern, as reported by The Wall Street Journal. 

See Also: Zoom, Five9 $15B Deal Comes Under Justice Department Scrutiny

The dropped deal could be a blow to Zoom's plan to expand offerings beyond video calling or Zoom Phone. The San Jose, California-based company has been searching for a breakthrough in the lucrative market of cloud-based contact center software, which helps businesses keep in touch with their customers.

Price Action: Zoom shares, which have fallen 28% since it announced the acquisition in July, closed 1.59% higher at $261.50 on Thursday. FIVN shares closed 1.23% lower at $159.74 on Thursday.

Photo: Courtesy of Zoom