In July this year, Zoom proposed to acquire the cloud customer service center Five9 through a share swap, but it was rejected by the latter’s shareholders and the transaction fell through. The most important reason is that Zoom’s stock price plummeted, prompting the veto of the transaction. This acquisition was originally full of variables, including the intervention of the US Department of Justice in a homeland security investigation, and the voting advisory firm ISS and Glass Lewis recommended against the transaction. The failure of the acquisition may affect Zoom’s grand plan to expand its customer service business.
Zoom proposes to exchange 0.5533 Zoom shares for every 1 share of Five9, involving a $14.7 billion acquisition. But as Zoom’s stock price went down, the trading premium depreciated sharply. Since Zoom announced the acquisition, the stock price has plummeted by 28% in just two months, making the transaction premium for this acquisition only 12.8%.
At the end of August, the company announced positive results for the second quarter of this year, with its first quarter revenue breaking through $1 billion. But at the same time it was pointed out that many countries around the world have resumed normal exchanges one after another, reducing the demand for video conferencing beyond expectations. This caused the stock price to fall sharply . Five9 shareholders hired two voting advisory companies Institutional Shareholder Services (ISS) and Glass Lewis. The report believes that Zoom’s growth prospects are no longer attractive, and based on this recommendation, they oppose the transaction.
This also represents that Zoom’s first acquisition of more than US$1 billion was tragically defeated by Waterloo.
Before the Five9 shareholders meeting voted, the US Department of Justice launched a transaction investigation to determine whether it poses a risk to national security. The Department of Justice pointed out to the Federal Communications Commission (FCC) that the risk may stem from “foreign participation.” Although not specified by the Department of Justice, Five9 is a US-based company founded by Americans. And because Zoom was considered by Washington to be a “Chinese entity” last year, for example, it was revealed that American users used China’s data center to support meetings, and there have been measures to improve the situation since then . In addition, the R&D team still has a certain degree of high proportion in China.
Five9 is a cloud customer service center software service. There are currently more than 2,000 customers worldwide, including Lululemon, Olympus, etc.
At this year’s user conference Zoomtopia , Zoom proposed the development of customer service solutions for Video Engagement Center (VCE), Find a new way out for the video conference platform in the post-epidemic era. This new business is based on Five9 technology. After the transaction was rejected by Five9 shareholders, Zoom announced that it would continue to cooperate with them.
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