Zoom CEO: Five9 Is ‘In No Way Foundational’ To Our Success: Acquisition Deal ‘Terminated’

Zoom’s blockbuster $14.7 billion acquisition of Five9 has been “terminated,” according to both companies.

Zoom’s biggest planned acquisition in its history has officially been “terminated” after Five9 shareholders voted down the contact center giant’s deal to be purchased by Zoom for a whopping $14.7 billion.

“While we were excited about the benefits this transaction would bring to both Zoom and Five9 stakeholders, including the long-term potential for both sets of shareholders, financial discipline is foundational to our strategy,” said Eric Yuan, Zoom CEO and founder, in a statement. “The contact center market remains a strategic priority for Zoom, and we are confident in our ability to capture its growth potential.”

In a separate blog post, Yuan said Zoom’s planned acquisition of Five9 “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 center solution. If one thing is certain here at Zoom, it is that we never rest on our laurels – we have the long-term vision, strategy, and team to continue delivering happiness and drive sustainable growth.”

Five9’s shareholders voted on Thursday to “terminate” the Zoom deal, according to a company statement. The shareholders’ decision came shortly after the U.S. Department of Justice said it was looking into the $14.7 billion acquisition due to potential national-security risks posed by Zoom’s ties with China.

[Related: Eric Yuan and Rowan Trollope: 5 Big Keys To Zoom-Five9 Merger]

In August, a U.S. Department of Justice-led panel began investigating the deal to determine if it “poses a risk to the national security or law enforcement interests of the United States,” according to a letter from the U.S. Department of Justice (USDOJ) and Committee for the Assessment of Foreign Participation in the U.S. Telecommunications Service Sector. “USDOJ believes that such risk may be raised by the foreign participation (including the foreign relationships and ownership) associated with the [acquisition], and a review by the Committee is necessary to assess and make an appropriate recommendation as to how the Commission should adjudicate this [acquisition],” said the letter.

Then in September, advisory firm Institutional Shareholder Services and Glass Lewis recommended that Five9 shareholders vote against the deal, citing growth concerns and dual-class shares.

“The all-stock deal exposes [Five9] shareholders to a more volatile stock whose growth prospects have become less compelling as society inches towards a post-pandemic environment,” the firm said in a report last month.

San Ramon, Calif.-based Five9 will continue to operate as a standalone, publicly traded company after not receiving enough votes from Five9 shareholders to approve the merger.

Zoom and Five9 will continue the partnership that was in place prior to the acquisition deal, which includes support for integrations between their Unified Communications as a Service (UCaaS) and Contact Center as a Service (CCaaS) solutions and joint go-to-market efforts.

“We also plan to maintain our long-standing partnerships with our valued contact center partners like Five9, Genesys, NICE inContact, Talkdesk, and Twilio to continue supporting our customers’ contact center of choice,” said Zoom’s CEO Yuan.

First unveiled in July, video communication superstar Zoom and cloud-based contact center standout Five9 planned to “redefine how companies of all sizes connect with their customers,” with the merger.

The news of the merger being terminated has had little impact on each companies’ stock price.

Five9’s stock is down just 1 percent today trading at $159.74 per share, while Zoom’s stock is actually up 1 percent at $261.50 per share.