Video conferencing giant Zoom is having troubles with its $14.7 billion deal to buy Five9 (Nasdaq: FIVN), a cloud-based call center operator.
Why it matters: Some of the opposition is related to shareholder value, but the bigger issue is geopolitical tensions with China.
Driving the news: The U.S. Justice Department is investigating the merger on national security grounds due to Zoom's ties to China (including R&D operations).
- For the record: Zoom is based in Silicon Valley, CEO Eric Yuan is a naturalized U.S. citizen and its top outside shareholders are U.S. mutual fund managers T. Rowe Price and Vanguard.
Also: Institutional Shareholder Services last week recommended that Five9 shareholders vote against the all-stock deal, saying it would expose them to “a more volatile stock whose growth prospects have become less compelling as society inches towards a post-pandemic environment."