Zoom and cloud company Five9 have canceled their $14.7 billion deal.

Zoom Video Communications’ bid to buy the cloud software provider Five9 has collapsed just weeks after the US Department of Justice raised national security concerns over the $14.7bn deal and shareholders were advised to vote against the takeover by a powerful proxy group.

The companies announced on Thursday they had decided to terminate their agreement following a shareholder meeting organised by Five9 during which a majority of investors said they were against the deal.

“We had the opportunity to engage extensively with our shareholders since our transaction announcement. We greatly appreciate their feedback and confidence in Five9’s future prospects and share their views regarding the significant potential for value creation as a standalone company,” said Rowan Trollope, chief executive of Five9.

The decision to end the takeover is a blow to Zoom, which is hoping to expand its offerings following the enormous success of its video conferencing services during the pandemic. The deal with Five9 would have been its largest acquisition to date, but was marred by a struggling share price and regulatory concerns.

Earlier this month the DoJ suggested that Zoom’s links to China needed further investigation before any deal could be approved.

Zoom depends on a large base of China-based developers, which US officials have long been concerned about, fearing it could compromise the security of the video communication company’s services.

The San Jose, California-based company has repeatedly stated that none of its customers’ data flows through China-based servers, although it admitted last year it had mistakenly routed some calls through China.

Zoom chief executive Eric Yuan wrote in a blog post that Five9 “presented an attractive means to bring to our customers an integrated contact centre offering”, but “it was in no way foundational to the success of our platform nor was it the only way for us to offer our customers a compelling contact centre solution”.

The all-share transaction announced in July initially valued Five9 shares at $200.28 each with investors set to receive 0.5533 shares of Zoom class A common stock. However, Zoom’s share price has since declined by 26 per cent on fears that the popularity of its video conferencing service will wane as workers return to the office.

The proxy advisory firm Institutional Shareholder Services earlier this month cited concerns about Zoom’s growth and advised Five9 shareholders to vote against the deal.

In a separate announcement, Five9 said it would host a virtual financial analyst day on November 18 to discuss its outlook and strategy.

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