Sep 22, 2021 - Economy

Zoom's mega-merger with Five9 is hitting speedbumps

Data: Yahoo Finance; Chart: Axios Visuals

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."

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