Zoom Falls After Five9 Takeover Collapses
By Dhirendra Tripathi
Investing.com – Zoom Video stock (NASDAQ: ZM ) traded 0.4% lower in Friday’s premarket as the company called off its acquisition of Cloud-based customer-service software provider Five9 (NASDAQ: FIVN ).
A rejection of the merger between the two companies by Five9’s shareholders forced Zoom to take the decision. The joint proposal did not receive the requisite number of votes from Five9 shareholders.
Zoom’s July 18 all-stock offer had valued Five9 at $13.56 billion. Zoom shares have lost around a third of their value since the offer was made and are trading not far from their 52-week low of $255.25.
Each Five9 share was then valued at $200.28. They traded 0.4% higher in today’s premarket, having lost around 16% of their value since the Zoom offer was made.
The acquisition was expected to enhance Zoom’s presence with enterprise customers and help the video chat service target the $24 billion contact center market.
Zoom, one of the biggest winners of the pandemic thanks to the breakneck-speed mass adoption of video-conferencing, was looking to take advantage of its rocketing stock value to expand beyond its core product. With the share price erosion and the merger rejected, Zoom now faces a calmer and arguably more challenging business environment as people return to their offices.
While the deal went through its regulatory checks,a Justice Department-led panel known as Team Telecom was reviewing the deal with an eye on national security risks, something that threatened to delay the merger further.
Zoom has regularly cited its Silicon Valley headquarters and the U.S. citizenship of its China-born Chief Executive Officer Eric Yuan as proof of its U.S. base. However, its reliance on servers in China have been identified as a possible security weakness.
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