Zoom & Five9 terminate $14.7 billion deal amidst scrutiny from the US government

Five9 announced in a statement that the merger agreement had been terminated with mutual agreement of both the companies. It stated that “the agreement did not receive the requisite number of votes from Five9 shareholders to approve the merger with Zoom.”

California-based Software developer Zoom’s agreement to acquire Five9, a cloud contact centre software company, fell through on Thursday, September 30, after failing to garner adequate support from Five9’s shareholders. Zoom had agreed to buy Five9 in an all-stock purchase for $14.7 billion in July earlier this year.

In a statement released to the press on Thursday evening, Five9 announced that the merger agreement had been terminated with mutual agreement of both the companies. It stated that “the agreement did not receive the requisite number of votes from Five9 shareholders to approve the merger with Zoom.”

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Five9 also announced that moving ahead, the company will continue to operate as a “standalone publicly-traded company,” following which its shares fell 2 per cent in extended trading.

Meanwhile, Eric S. Yuan, the CEO of Zoom, wrote in a blog post that the acquisition of Five9 “presented an attractive means to bring to our customers an integrated contact centre offering” but also mentioned that the termination of the deal will have no significant impact on the future and success of Zoom. 

“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 centre solution,” He said in regards to the Five9 acquisition 

The recent development barring the merger comes after a proxy advisory firm Institutional Shareholder Services recommended Five9 shareholders to vote against the deal earlier this month amid scrutiny from the government.

Zoom had disclosed last week that a U.S. Justice Department-led panel had been investigating the merger agreement over concerns that it might create national security risks given Zoom’s ties to China since August, stating that a federal review was required to determine whether the deal “poses a risk to the national security or law enforcement interests of the United States.’