Zoom says it no longer plans to acquire cloud-based call center software maker Five9, following the FCC's review of the $14.7B deal on national security grounds

13% — Zoom was paying. Zoom and Five9 abandon $14.7 billion acquisition https://www.cnbc.com/...

CNBC 2021-10-02 Jordan Novet

Context & Ripple Effects

Zoom’s planned all-stock purchase of Five9 was announced as a move into cloud software for sales, marketing and support; the FCC then opened a national-security review of the proposed transaction. The collapse leaves that expansion unconsummated.

The review also followed earlier reporting of security, privacy and China-related investigations involving Zoom, making regulatory exposure central to the deal’s outcome rather than a routine closing condition.

First-order effects

Zoom loses the planned addition of Five9’s cloud call-center software and must continue its enterprise expansion without the acquired business.
Five9 remains independent after shareholders were asked to consider Zoom’s proposed all-stock acquisition.

Second-order effects

The FCC’s intervention makes national-security review a more concrete transaction risk for Zoom and Five9 in any future dealmaking involving their communications and customer-service software.
Other buyers and sellers in communications software face a stronger incentive to assess FCC scrutiny before structuring transactions with China-related exposure.

Third-order effects

If this review pattern persists, national-security considerations will shape consolidation in communications infrastructure and software alongside conventional antitrust and shareholder tests.

The trend: The failed Zoom–Five9 transaction is part of a broader shift toward national-security review as a gatekeeper for communications-technology dealmaking.

Discussion

@arashmassoudi Arash Massoudi on x
Zoom shares are down 44% over the past 12 months. The US govt remains concerned about its China links And its $15bn all-share mega-deal collapsed late yesterday. The break-out star company of the pandemic era is going thru a very rough patch https://www.ft.com/...
@rowantrollope @rowantrollope on x
@Five9, our future is brighter than ever. We'll be moving forward as a standalone company. The contact center is the new front door for business, and we're excited to help our customers reimagine their CX and deliver real business results. Read more here: https://www.businesswire…
@collabjonathan Jonathan Schulenberg on x
This is probably a good thing for Five9 in the end. The moment this was announced in July there was an assumption, despite what the press release said, that Five9 would become the CCaaS platform for Zoom Phone customers - and maybe not the best choice for everyone else. No more. …
@neiltwitz Neil Shah on x
Big blow to @Zoom plans & growth strategy as @Five9 shareholders tank the $15B deal. Who will Zoom go after next? Genesis, 8x8, etc #CPInsights #acquisition https://twitter.com/...
@kate_okeeffe Kate O'Keeffe on x
Shareholders just shot down Zoom's nearly $15 billion deal for Five9. There were lots of issues including a national security review due to U.S. concerns about Zoom's China ties https://www.wsj.com/... By @aatilley
@baldingsworld @baldingsworld on x
Landscape becoming increasingly difficult for Chinese companies looking to acquire US firms https://www.wsj.com/...
@carnage4life Dare Obasanjo on x
Not a good sign for Zoom that Five9 shareholders rejected the $14.7B acquisition because it was too low. Zoom's stock has dropped 28% since deal was announced, while Five9 shares have fallen only 11% indicating Zoom has lower prospects than Five9. Yikes! https://www.cnbc.com/...
@levynews Ari Levy on x
This is crazy. Not sure I've ever seen a mutually agreed upon dissolution of a deal this size. Likely came down to the small premium — 13% — Zoom was paying. Zoom and Five9 abandon $14.7 billion acquisition https://www.cnbc.com/...

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