An influential advisory firm has told Five9 shareholders to reject the acquisition bid made by Zoom at a special meeting set for the end of this month.
The proposed takeover, one of the biggest stories in the UC and CC industries of the year, was announced in July and valued at $14.7bn.
But the deal does not involve the exchange of any cash, with Zoom offering 0.5533 shares for each Five9 share.
The problem, highlighted by ISS, is that Zoom stock has tumbled by 25 percent since the acquisition was announced – meaning that the implied value of a Five9 share has fallen from $200 to around $156.
ISS said that the volatility of Zoom stock would also present a risk to Five9 shareholders.
Zoom’s share price has yo-yoed over the course of the pandemic and is currently down around 50 percent from its peak in October last year, although still up over 300 percent compared to the start of 2020.
The firm recently announced its first-ever $1bn-revenue quarter, but this also came with a warning that its growth is poised to slow – particularly as some smaller businesses return to offices.
ISS also criticised Five9 over its handling of the sale process, calling it “sub-optimal” because of a lack of aggression when negotiating terms, as well as not carrying out an auction to see if a better offer could have come to light.
