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National security concerns scuttled the proposed deal.

Zoom and Five9 have mutually terminated the merger agreement executed by the parties in July. Both Five9 and Zoom have issued statements saying that the acquisition deal was terminated by mutual agreement.

Zoom issued a matter of fact statement about the collapse of the deal. “At Five9’s special meeting of stockholders held on September 30, 2021, Five9 did not obtain the requisite stockholder support for the merger agreement. As a result, Zoom and Five9 each had the ability to terminate the merger agreement.”

“The agreement did not receive the requisite number of votes from Five9 shareholders to approve the merger with Zoom,” Five9 said in their own statement. “Five9 will continue to operate as a standalone publicly-traded company.”

The partnership shall continue

The two companies will continue the partnership that was in place before the takeover attempt. That includes support for integrations between their respective unified communications-as-a-service and contact center-as-a-service solutions. They also have joint go-to-market plans.

Five9 offers cloud software for the enterprise contact center market with a software-as-a-service platform. Like Zoom, Five9 also saw rapid growth over the last year due to the COVID-19 pandemic.

In September, the U.S. Department of Justice announced that its national security division had raised concerns about the takeover. The division reportedly asked the Federal Communications Commission to allow a further investigation by the DOJ’s committee for the Assessment of Foreign Participation in the United States Telecommunications Service Sector.

The Justice Department specifically cited “the foreign relationships and ownership” of Zoom as a potential national security risk. Zoom has its origins in China.

Nonetheless, industry watchers expected that the deal would likely gain approval. The fact that Five9 shareholders have rejected the offer before the Justice Department could thoroughly review the deal makes any investigation now a moot point.

Eric S. Yuan, Chief Executive Officer and Founder of Zoom, commented. “The contact center market remains a strategic priority for Zoom, and we are confident in our ability to capture its growth potential.”