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Zoom Video Stock Gains After Five9 Shareholders Reject $14.7 Billion Takeover

Five9 shareholders rejected a $14.7 billion all-stock takeover bid from Zoom Video Communications late Thursday.

Zoom Video Communications  (ZM) - Get Zoom Video Communications (ZM) Report edged higher Friday after shareholders of call center software group Five9  (FIVN) - Get Five9 Inc. Report voted to reject its $14.7 billion takeover bid.

The deal, Zoom's largest-ever, would have transformed its platform offering and added a new dimension for investors worried that its popularity would wane as workers and students return to offices and schools in wake of the coronavirus pandemic.

However, a the ongoing slide in Zoom's share price made the all-stock deal far less attractive to Five9 shareholders, given that it implied a bid price of $200.28 in early July, but only a $144.70 price when the vote took place last night. Five9 investors were also advised to reject the deal by proxy advisor group Institutional Shareholder Services. 

“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 Zoom CEO Eric Yuan. “The contact center market remains a strategic priority for Zoom, and we are confident in our ability to capture its growth potential.  

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"We also plan to maintain our valued existing contact center partnerships with companies like Five9, Genesys, NICE inContact, Talkdesk, and Twilio," he added. "We remain focused on driving long-term value creation for Zoom shareholders and delivering happiness to our customers through our broad-based communications platform including unified communications, developer, and events solutions.”  

Zoom shares were marked 1.33% higher in pre-market trading to indicate an opening bell price of $265.0e each, while Five9 shares fell 1.7% to $157.01 each.

Last month, Zoom said its current quarter revenues would likely slow as smaller companies return to office-based work and schools transition to full-time lessons.

Zoom topped Street forecasts with its second quarter earnings report, notching a bottom line of $1.04 per share on record revenues of $1.02 billion, but said the growth rate of sales going forward would slow significantly from pandemic-peak levels.

Looking into the back half of the year, Zoom said it sees third quarter revenues of between $1.015 billion and $1.020 billion, implying a year-on-year growth rate of around 31.2%, well shy of the 54% second quarter pace and the 191% gain booked over the first three months of the year.