Benzinga | Sep 7, 2021 11:16AM EDT

Five9 Shareholders Will Likely Reject Zoom Deal, Needham Says

Zoom Video Communications Inc's (NASDAQ:ZM) current offer to acquire Five9 Inc (NASDAQ:FIVN) seems "fundamentally flawed," according to Needham.

The Five9 Analyst: Scott Berg upgraded the rating for Five9 from Hold to Buy, while establishing a price target of $200.

The Five9 Thesis: Zoom Video Communications has offered to acquire Five9 at a conversion rate of 0.5533 which is dragging the acquisition price down by 17.6% from the initial $200.23 price, Berg said in the upgrade note.

He added that the current offer is lower than the $177.60 price pre-acquisition.

"The first way to win is we believe ZM will need to raise its consideration or add cash to bracket a $200 price for FIVN shares or shareholders may reject the deal," the analyst wrote.

"FIVN demand is strong so voting down the deal is a win for shareholders as its independent price would likely be higher than current levels with a great near-term outlook," he further noted.

"FIVN's 2Q21 financial results suggest business momentum remains strong, share likely flat to higher on a stand-alone basis," Berg noted.

FIVN Price Action: Shares of Five9 had risen by 0.12% to $170.39 at the time of publication Tuesday.

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