Yahoo Finance Zoom Slips on Report Five9 Deal Faces Review Over China Links
By Dhirendra Tripathi
Investing.com – Zoom Video stock (NASDAQ:ZM) fell 0.6% after a report in The Wall Street Journal suggesting the company’s acquisition of Five9 (NASDAQ:FIVN) may take more time pending review of its links with China.
Five9 shares traded 0.3% lower.
According to the report, a Justice Department-led panel known as Team Telecom, is reviewing the deal with an eye on national security risks.
The Justice Department has requested the Federal Communications Commission to defer action on the application until Team Telecom finishes its review, according to the report.
Zoom has regularly cited its Silicon Valley headquarters and the U.S. citizenship of its China-born Chief Executive Officer Eric Yuan as proof of its U.S. base.
In April last year, security experts found that in certain cases, Zoom stored encryption keys on servers based in China. The company called it a mistake it won't repeat.
As per the July 18 all-stock offer, Five9 stockholders will receive 0.55 shares of Zoom for each share of the company they hold. This represents a per share price for Five9 stock of $200.28 and values the company at $13.56 billion.
The acquisition is expected to enhance Zoom’s presence with enterprise customers and help the video conferencing service target the $24 billion contact center market.
Five9 is a pioneer of cloud-based contact center software. Its cloud contact center offers applications that allow management of customer interactions across many channels.
The acquisition is complementary to the growing popularity of Zoom's cloud-based phone system that offers a digital alternative to traditional phone systems in offices, Zoom said in its note announcing the offer.
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