By Dhirendra Tripathi

Investing.com – Zoom Video stock (NASDAQ:) traded 0.4% lower in Friday’s premarket as the company called off its acquisition of Cloud-based customer-service software provider Five9 (NASDAQ:).

A rejection of the merger between the two companies by Five9’s shareholders forced Zoom to take the decision. The Five9 shareholders did not vote for the joint proposal.

Zoom’s July 18 all-stock offer had valued Five9 at $13.56 billion. Zoom shares are now trading at a 52-week low, $255.25, and have lost about a third their value since the offer.

At that point, each Five9 share was valued at $200.28. They traded 0.4% higher in today’s premarket, having lost around 16% of their value since the Zoom offer was made.

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

Zoom was one of the largest pandemic winners due to its rapid adoption of videoconferencing. It wanted to capitalize on its stock market’s rocketing value and expand its product offerings. Zoom is now facing a more calm and challenging environment, as employees return to work after the collapse of its share price and rejection of the merger.  

After the transaction passed its regulatory inspections, Team Telecom, a Justice Department panel, was reviewing it with an eye to national security risk. This could have caused further delays. 

Zoom frequently cites its Silicon Valley headquarters as well as the U.S citizenship of Eric, its Chinese-born Chief Executive Officer Eric, to prove its U.S. bases. But, the reliance on servers located in China has been identified to be a security vulnerability.