Anson Funds Pushes Five9 (FIVN) Towards Potential Sale Post Zoom Deal Rebuff
By Svea Herbst-Bayliss, Leading Financial Markets Journalist & Top Investment Manager
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In a bold move, Anson Funds Management has secured a significant stake in Five9 Inc. (NASDAQ: FIVN), a leading U.S. call center software provider, and is now advocating for the company to consider a sale, according to sources familiar with the matter.
This development follows Five9's rejection of a $14.7 billion acquisition offer from Zoom Video Communications Inc. (NASDAQ: ZM) last year. The proposed acquisition, which would have been paid for in Zoom stock, was declined by Five9's shareholders who were wary of Zoom's stock performance as the pandemic waned and office work resumed.
Despite no official comment from Five9 or Anson Funds, the market reacted positively to the news, with Five9’s shares closing 4.3% higher at $41.72 on Thursday, translating to a market capitalization of approximately $3 billion.
Context and Market Dynamics
In 2021, Zoom's ambitious acquisition attempt was thwarted by Five9 shareholders, who doubted the long-term value of Zoom stock. This skepticism was not unfounded as both companies have seen significant share price declines; Five9's shares have dropped 45% and Zoom’s shares are down 18% since January. These declines have been attributed to corporate clients cutting back on spending amid fears of an economic slowdown.
Anson Funds’ Strategic Play
Anson Funds, which manages about $1.9 billion in assets, has recently intensified its focus on shareholder activism. The hiring of Sagar Gupta, formerly of activist investment firm Legion Partners, underscores this strategy. Gupta, who joined Anson in October 2023, has a robust track record in technology, media, and telecommunications investments.
Anson’s move comes during a period of heightened activist investor activity, where the emphasis is on driving returns through strategic corporate actions, including pushing for sales. This approach is particularly relevant in the technology sector, where mergers and acquisitions (M&A) have been sluggish due to concerns over interest rates and regulatory hurdles.
Breaking It Down: What This Means for Investors
- Anson Funds’ Stake in Five9: Anson Funds has bought into Five9 and is pushing for the company to consider a sale. This could potentially lead to a significant change in ownership and strategy for Five9.
- Historical Context with Zoom: Five9 previously walked away from a high-value acquisition offer from Zoom. This history is critical because it shows that Five9's shareholders are cautious about accepting deals that don't offer clear, immediate value.
- Market Reactions: The news has positively impacted Five9's stock price, signaling investor optimism about the possibility of a sale or other value-enhancing actions.
- Activist Investment Strategy: Anson Funds’ approach is part of a broader trend where activist investors are pushing for corporate sales to unlock shareholder value, particularly in the tech sector.
In Simple Terms:
Anson Funds, a big investment firm, bought a lot of shares in Five9, a company that makes software for call centers. They want Five9 to think about selling the company. Last year, Five9 said "no" to being bought by Zoom, a company that makes video call software, because their shareholders didn't like the deal.
Right now, the stock market likes the idea of Five9 possibly being sold, and that's why Five9’s stock price went up. Anson Funds is known for pushing companies to make changes that could make their stocks worth more, and they hired an expert to help them do this.
For regular investors, it means there might be some big changes coming for Five9 that could affect the stock price. If Five9 does get sold, it could mean a higher stock price, but it's also important to be cautious and see how things play out.