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Zoom Slips on Report Five9 Deal Faces Review Over China Links By


© Reuters.

By Dhirendra Tripathi – Zoom Video stock (NASDAQ:) fell 0.6% after a report in The Wall Street Journal suggesting the company’s acquisition of Five9 (NASDAQ:) may take more time pending review of its links with China.

Five9 shares were 0.3% less.

A Team Telecom-led Justice Department committee is currently reviewing this deal, with an eye towards national security risk.

According to the report the Justice Department asked the Federal Communications Commission not to act on the application until Team Telecom has completed its review.

Zoom has regularly cited its Silicon Valley headquarters and the U.S. citizenship of its China-born Chief Executive Officer Eric as proof of its U.S. base.  

Security specialists discovered in April that Zoom kept encryption keys on Chinese-based servers. This was called a misstep that Zoom will never repeat.

According to the all-stock deal of July 18, Five9 stockholders will be entitled to 0.55 Zoom shares for every share of the company. It represents a price per share of Five9 stock at $200.28, and the company’s value at $13.56billion.

The acquisition is expected to enhance Zoom’s presence with enterprise customers and help the video conferencing service target the $24 billion contact center market.

Five9 has been a leader in cloud-based customer service software. The company’s cloud-based contact center allows customers to interact across multiple channels.

Zoom stated in a note that the acquisition was in addition to its cloud-based phone system, which is becoming increasingly popular. It offers an alternative to office phone systems and provides a digital solution for customer interactions.

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