Zoom’s doomed deal might have uncovered a weak point

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NEW YORK, Oct 1 (Reuters Breakingviews) – Zoom Video Communications (ZM.O) isn’t any worse off for failing to merge with call-center operator Five9 (FIVN.O) learn extra . At least the entire thing began and completed in simply over two months, a stark distinction to doomed mergers just like the dalliance between chipmakers Broadcom (AVGO.O) and Qualcomm (QCOM.O) in 2017 that dragged on for not less than twice as lengthy. But Zoom Chief Executive Eric Yuan might have opened up a vulnerability.

Zoom’s shares didn’t budge because it scrapped the deal on Friday – in spite of everything, it was no shock learn extra – however they’ve moved quite a bit because it introduced the union in July. The video conferencing agency has misplaced over $25 billion in market worth – round 1 / 4 of its value – whereas the MSCI All Countries Americas Software Index is flat. That places stress on Yuan to elucidate his plan for preserving development motoring with out Five9.

If he doesn’t persuade, he might get an unwelcome incoming name – from an activist. Yuan holds 30% of Zoom’s vote, however a controlling shareholder didn’t cease Elliott Management from going after on-line storage agency Dropbox (DBX.O). There’s no disgrace in making an attempt and failing, however that doesn’t imply there are not any penalties. (By Jennifer Saba)

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Editing by John Foley and Amanda Gomez

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Small toy figures are seen in front of Zoom logo in this illustration picture taken March 15, 2021. REUTERS/Dado Ruvic/Illustration/File Photo