Finance Stories

Story of the Week – The all-stock deals market – Zoom call off 15Bn deal with Five9

In the recent turn of events, supposedly one of the biggest tech deals of the decade has been called off as the Five9 shareholder majority voted against it.

2021, the year of stock fueled M&A frenzy, has seemed to realize the relatively high market valuation and may soon come to an end. Recently, Five9 has announced that it would not go ahead with the merger with Zoom. Shareholders argued that their deal with Zoom would expose them to more volatile stock with a future under the dark clouds.

Since its COVID fueled boom, Zoom stock has plunged by ~30% as the world plans for the post-COVID era.

It would be interesting to see how other companies looking for a similar stock-based deal would react to these recent turn of events in the tech world. 

US deals
Image Credit – Stock Axis

Global Market Update

Global Equity Market – 

A swift recovery in the market could face volatility post jobs numbers released on Friday. Relative to the earlier month number of ~360k, the US posted ~195k new jobs in Sep. Though the unemployment rate is declining, the effect of the delta variant seems to be the key driver in declining numbers.

S&P 500

The Rising Energy Prices – 

The demand and supply issue in the industry keeps the prices pumping. Based on recent CPI numbers, the oil prices are up YoY by ~25%. Global economies such as China and India face severe energy crises while other EU countries follow.

On the positive side, the rising energy prices could be a good opportunity for a swifter transition toward renewable energy.

Companies in focus – 

  • Bed, Bath & Beyond experienced a heavy dip in stock prices as the company reported lower earnings fueled by delta variant and supply chain disruption.
  • Hotel chain Oyo filed for a local IPO to raise over $1.1 billion. SoftBank, Sequoia Capital India, Microsoft, Lightspeed Venture Partners, and Airbnb have all invested over $3 billion in the company, which now has a $9.6 billion valuation.
  • The firm Clayton, Dubilier & Rice won the auction for the British supermarket chain Morrisons (LSE: MRW) by making a bid of £7 billion
  • Friday afternoon, OZY Media was shut down, with CEO Carlos Watson refusing to take questions during a five-minute conference call with employees

Thanks for Reading!

Shubham Agarwal (CFA L2 Candidate | MBA candidate at University of Cambridge, UK)

Want to discuss this further or have questions regarding finance/strategy? Feel free to connect here – https://www.linkedin.com/in/shubhamagarwal13/

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