Online video-conferencing services provider Zoom Video Communications Inc. (ZM) has abandoned a $14.7 acquisition deal of leading provider of cloud contact center solutions Five9 Inc. (FIVN) following various which came up while the deal was almost getting closed.
Among the major reasons is the unwillingness by Zoom to add cash on its bid as the company was relying on an all-stock deal to close the acquisition deal. Following withdrawal from the deal, shares of Zoom declined by nearly 29%. This merger deal was announced back in July.
At the end of last week shareholders from Five9 voted the deal down. It is feared that after the pandemic is over, physical meetings will resume once again and this will greatly affect Zoom. It is this reason why Zoom was considering this acquisition deal.
Experts in the industry are claiming that the stock of Zoom will remain highly volatile until the company figures a way out on how it will maintain its business once the pandemic is over and the fact that Zoom is only willing to offer stock only as currency will only make matters tougher.
“Zoom has to figure out how to keep some of the customers that signed up as individual subscribers that may not need Zoom when they return to more physical lives,” said a senior analyst at Wolfe Research, Alex Zukin.