The rumour mill has been churning recently, ultimately suggesting that neither Five9 nor Zoom have any interest in an acquisition agreement despite talks.
Evidently, some vital information is missing, or certain reports are false because, as it stands, this appears to be the work of a very poor matchmaker!
Such a deal has been on the table before, however. Just over two years ago, Zoom made an offer to acquire Five9, but the contact centre software provider Five9 chose to turn it down, following pressure from investors and a sharp decline in Zoom’s share price.
How Did We Get Here?
On Monday, Bloomberg reported that Five9 was considering being bought out by Zoom, following discussions that had already taken place between the two companies.
Five9, it said, was “working with advisers as it seeks to gauge interest from potential buyers”.
The following day, it was reported that neither Zoom nor Five9 were interested in any deal going ahead.
Seeking Alpha reported that a Zoom representative said on a bus tour that it did not want to acquire Five9 and that, instead, it was looking to focus on building itself.
Meanwhile, Five9 released a similar statement:
Although Five9’s general policy is not to comment on market rumors or media speculation, Five9 was approached with such an opportunity; however, Five9 is not pursuing any such acquisition.”
The Reaction So Far
The lack of answers has given rise to a wave of questions, and private discussions are now a public affair, with Five9’s stock prices falling six percent and Zoom’s dropping 0.5 percent as a result of these surreptitious talks.
Metrigy’s principal analyst, Diane Myers, believes that were these talks serious. However, she added that although the markets are more favourable now, it will not be easy trying to persuade the board, which previously shut the deal down, that it is a good idea.
One possibility could be that Five9 was trying to “gauge interest”, but it was not seriously considering selling unless perhaps the price was right. Now that the cat is out of the bag, and perhaps to avoid stocks tumbling even further, it has chosen to stick to one story.
We don’t know. Perhaps Zoom has chosen to take the same stance for the same reasons. Did we simply get wind of the negotiation process halfway through before either party had time to build any confidence in an agreement?
Another explanation is that one or both companies were interested, but the talks simply fell through for one reason or another.
Irwin Lazar, President and Principal Analyst at Metrigy, is unsurprised by the meeting, and he is quoted as saying: “It would make sense for Five9 to look for a UC buyer and Zoom to leverage Five9 to accelerate and strengthen its contact centre offering.”
Should There Be a Deal?
Whatever the truth is, it does raise the question of whether a deal like this could go ahead. Has Five9’s importance grown or waned over the past two years, and is Zoom looking to expand further into CCaaS territory now, or does its decision to “build itself” attest to the contrary?
Chief Global Analyst at Techaisle, Anurag Agrawal, is reported as saying the partnership could be a beneficial one: “The fusion of Zoom’s supremacy in video conferencing and Five9’s proficiency in cloud contact centre could potentially forge a robust, all-in-one platform for customer interaction.
“This synergy could not only draw in new clientele but also fortify their standing against competitors such as Microsoft and Cisco.”
Steven Karachinsky, CEO at ZIRO, on the other hand, does not think the deal would make any sense. From Zoom’s perspective, it is already developing its own contact centre abilities, and Five9 should not be tempted as it is in a much more “robust” position than Zoom.
Watch this space as the story evolves!
