Zoom, Five9 to terminate nearly $15B all-stock deal after shareholder vote

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Proxy advisory firms Institutional Shareholder Services and Glass Lewis recommended five 9 shareholders vote against the deal.

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Shareholders of Five9 Inc voted Thursday the $14.7 billion sale of the call center software firm to Zoom Video Communications Inc., a major blow to Zoom’s plans to expand its offerings after the pandemic boom.

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Zoom’s largest acquisition to date was by proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis earlier this month, recommending that Five9 shareholders cite growth concerns and dual-class shares. Vote against the deal. read more

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Under the terms of the deal announced in July, Five9 shareholders will receive 0.5533 Zoom shares for every Five9 share. The terms implied a 12.8% premium over Five9’s market value and valued the company at $14.7 billion.

Zoom $14.7B . gets five for

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Since then, Zoom’s stock has fallen more than 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 moves towards a post-pandemic environment,” the ISS said in its report earlier this month. Is.”

San Ramon, Calif.-based Five9 said that the merger agreement did not receive enough approval votes from its shareholders, and it will continue to operate as a standalone publicly traded company.

Zoom CEO Eric Yuan said on Thursday that Five9 offers an attractive tool to bring customers a unified Contact Center offering.

“That said, it was by no means foundational to the success of our platform, nor was it the only way for us to provide a compelling contact center solution to our customers,” Yuan said.

The company said it will launch its cloud-based contact center solution Zoom Video Engagement Center in early 2022.

Five9 said it would continue the partnership with Zoom that it had prior to the announcement.

Zoom became a household name and an investor favorite as activity and businesses and schools embraced its services to conduct virtual classes and office meetings.

But with rapid vaccinations and life returning to normal, Zoom was looking for revenue sources beyond its core video conferencing business, which faces stiff competition from rivals Microsoft Corp., Cisco Systems Inc. and Salesforce Slack.

According to a letter filed with US regulators, a US Justice Department-led committee was reviewing Zoom’s proposed purchase of Five9 over potential national security concerns, although analysts said last week that the deal was likely to end as a result. was not.

Zoom’s relationship with China has been scrutinized in recent years.

Shares of Five9, which rose 19.3% since the deal was announced in July, fell 1.1% to $157.9 in extended trading on Thursday.

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Five9, whose call center software is used by more than 2,000 customers worldwide, counts firms such as Under Armour, Lululemon Athletica Inc. and Olympus Corp. as customers.


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