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LONDON, ENGLAND – JANUARY 11: In this photo illustration, the Zoom app is seen on a mobile phone on Jan. 11, 2021 in London, United Kingdom. (Photo by Edward Smith/Getty Images)

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Videoconferencing giant


Zoom Video Communications

and cloud-based contact center software company


Five9

have agreed to terminate their merger agreement, the companies said Thursday afternoon. The merger didn’t receive enough votes from Five9 shareholders, according the companies, and the company will continue to operate as a stand-alone publicly traded company.

“The contact center market remains a strategic priority for Zoom, and we are confident in our ability to capture its growth potential,” said Eric Yuan, CEO and founder of Zoom, in a statement. He notes that the firm will launch its cloud-based contact center solution, the Zoom Video Engagement Center, in early 2022. The firm will also maintain its existing contact center partnerships with companies like Five9, Genesys, NICE inContact, Talkdesk, and


Twilio
.

Zoom (ticker: ZM) first announced plans to acquire Five9 (FIVN) for $14.7 billion in an all-stock deal in July. The move was designed to help the company become a major player in call center software. 

Zoom has seen astonishing growth in users number during the pandemic, as millions of people were locked down at their homes and needed to communicate virtually with family and work. The stock surged 402% from March to mid-October 2020. 

As the world begins to move past the pandemic, however, the videoconferencing firm is expected to see much weaker growth, and it may have trouble sustaining its lofty share price. To continue expanding its business, Zoom has been adding new offerings such as cloud-based telephony services. In a presentation to analysts on the Five9 deal, Zoom said it would boost the firm’s total addressable market by $24 billion.

But the deal fell into trouble two weeks ago as


Institutional Shareholder Services
,
a proxy-analysis firm, advised Five9 shareholders to reject the Zoom offer. ISS warned that the deal would expose current Five9 investors to a more volatile stock with weak growth prospects.

The acquisition received another blow last week as the Justice Department said that it believes the deal may pose national security risk due to foreign participation associated with the license application. The Justice Department said a special committee would lead an investigation into those concerns and requests the FCC hold off on its own decision until after the review.

Zoom stock has tumbled 28% since the deal was announced, while Five9 shares slid 10%.

Write to Evie Liu at [email protected]

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