$15 Billion Acquisition of Zoom’s Five9 Rejected by Shareholders

Zoom’s five9 agreement to purchase call center software company Five 9 were dashed this week, following the denial of the agreement by Five9 shareholders.

In July this year, Zoom mentioned that it was buying Five 9 in an all-stock acquisition for nearly 15 billion dollars. It was its first acquisition of more than a billion-dollar and also the second-biggest tech deal of 2021. It has now lost a chance to rapidly extend its abilities following its stock rallied throughout the Covid-19 pandemic.

There was a drop of 2 percent in the shares of Five9 in extended trading after the statement from the companies.

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The Company has been seeking methods to grow as employees start to come back to work and students go back to school. The deal would have aided Zoom in extending its services to its more productive business clients.

The deal would have placed the company into a 24 billion dollars’ market for call centers, assisting it better compete with RingCentral Inc., Cisco Systems Inc., and Amazon in allowing the clients to give customer service online.

The re-assessment of the deal

Also, Eric Yuan, the CEO and founder of Zoom’s, wrote that acquiring Five9 showed an attractive revenue to offer a combined contact center to our clients.

One of the branches of the United States Department of Justice was re-assessing the agreement out of worry about potential foreign participation, as per a letter from August 2021. The letter was later sent to the Federal Communications Commission.

$15 Billion Acquisition of Zoom’s Five9
$15 Billion Acquisition of Zoom’s Five9

When news of the reassessment was reported, Zoom said it still anticipated Zoom’s Five9 agreement to close in the first half of 2022.

The Zoom’s Five9 deal didn’t get ample approval votes from its stockholders, said San Ramon.

Zoom turned out to be a popular name and an investor first choice since the Covid-19 pandemic closed down on activity and businesses. Also, many learning institutes and schools adopted its services to online classes and business conferences.

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We would carry on with the partnership with Zoom, said Five9 before the announcement. Moreover, the stocks of Five9 that got up to 19 percent as the agreement was announced this year saw a decline of 1.3 percent.

Rowan’s Statement

The CEO of Five9, Rowan Trollope, mentioned in a different statement that after the proposal from Zoom, investors had shown confidence in the upcoming prospects of Five9 and its great potential for value creation as a separate company. Zoom planned an analyst day on November 18 to outline its strategies.

Zoom’s connections with China

The Zoom’s Five9 agreement drew inspection from the United States regulators over national safety concerns. The Wall Street Journal published the previous week mentioned that a US Justice Department-led committee was inspecting the planned merger over Zoom-China connections.

In a letter that was posted on the site of the Federal Communications Commission, it was mentioned by the Justice Department that foreign relationships and ownership could pose a threat.

There were many questions raised regarding Zoom’s connections with China throughout the Covid-19 pandemic because its services became a support for a lot of individuals and companies.

A majority of engineers working in Zoom have historically been based in China, and in 2020 security researchers found that the company is keeping encryption keys. Encryption keys are long threads of characters and numbers that can be utilized for accessing encoded communications. It was a mistake, and we promise it won’t happen again, said the company.

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The United States prosecutors have indicted Zoom for wrongly working with the Government of China. Federal prosecutors in December last year accused a China-based executive in Zoom of planning to interrupt commemorations over Zoom of the 1989 Chinese military attack on pro-democracy protests in the capital of China.

In reply to the charge, Zoom said that it cooperated with the United States officials, carried out an internal evaluation, and fired the employee for violating the rules of the company.

None of its client’s data flows via China-based servers, said The San Jose, California-based company. However, the company admitted the previous year that it had routed a few calls via China by mistake.

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