Shareholders of Five9 Inc, a US-based cloud software provider for contact centers, have reportedly voted to reject the company's proposed sale to video teleconferencing software company, Zoom Video Communications Inc., effectively halting the virtual conferencing giant's largest-ever purchase.
According to reliable reports, the news comes after proxy advice company, Institutional Shareholder Services, recommended earlier this month that Five9 investors vote against the merger, citing growth concerns.
The San Ramon, California-based firm stated that the deal did not get the required number of votes from its shareholders to authorize the merger with Zoom. Consequently, it will continue to function as a separate publicly traded firm.
Due to the COVID-19 pandemic, Zoom has now become a household name and an investor favorite, as companies and schools have used its services to host virtual courses and workplace meetings.
However, with quick vaccination drives returning life to normal, Zoom has been trying to generate income outside of its main video conferencing service, which faces strong competition from enterprises such as Cisco Systems Inc, Salesforce's Slack, and Microsoft Corp.
Analysts predicted last week that the transaction would be delayed by a US Justice Department-led panel investigation but would not be canceled.
For the uninitiated, according to a letter filed with US authorities, a US Justice Department-led group was also evaluating Zoom's proposed all-stock agreement to purchase Five9.
According to the letter, which was filed with the Federal Communications Commission on August 27, the Committee for the Assessment of Foreign Participation in the US Telecommunications Services Industry was looking into whether the deal poses a threat to law enforcement or national security interests.
Zoom's relationship with China has come under scrutiny in recent years. In December, US authorities charged a former Zoom executive stationed in China for interrupting video meetings marking the 31st anniversary of the Tiananmen Square crackdown at the Chinese government's request.
Zoom CEO, Eric Yuan, stated that Five9 provided an appealing way to introduce an integrated contact center service to its clients. However, Yuan clarified that the takeover was neither foundational for the success of the company’s platform nor the only pathway for it to offer its customers compelling contact center solutions.