Sept 17 Reuters - The technology advisory firm Five 9 Inc recommended a vote by shareholders against Zoom Video Communications Inc's $14.7 billion transaction for cloud-based call center operator Institutional Shareholder Services citing growth concerns.
Although the mixed company has access to a larger market, the all-stock deal exposes Five 9 shareholders to a more volatile stock whose growth prospects have become less compelling as society inches towards a post-pandemic environment. Since the deal was announced on 18 July, Zoom shares have lost more than 20% of their value, while Five 9 has dropped about 5%.
A pandemic winner whose shares surged nearly 396% last year, Zoom broke its largest-ever acquisition for Five 9 in a bid to expand beyond its core videoconferencing services.
The company announced earlier this month improvements and expansions to its services, which included event lobbies, chat, networking in the hope that consumers will continue to use its platform for remote-working.
ISS said the new additions failed to satisfy shareholder concerns of continuing business churn, however, Five 9' s prospects have improved since the acquisition was announced and could attract more bidders if the deal falls apart.
Zoom and Five 9 were not immediately available to comment.
Zoom shares had increased nearly 18% this year and were up 2% in early trading while Five 9 was up 2.5%.