Zoom and Five9 abandon $14.7 billion acquisition

Eric Yuan, founder and chief executive officer of Zoom Video Communications Inc., speaks during the BoxWorks 2019 Conference at the Moscone Center in San Francisco, California, U.S., on Thursday, Oct. 3, 2019.

Michael Short | Bloomberg | Getty Images

Cloud contact center software company Five9 and video calling software maker Zoom said Thursday they will not go forward with Zoom’s plan to acquire Five9 for $14.7 billion.

Five9 shares fell 2% in extended trading following the statement from the companies, which said the acquisition didn’t receive enough votes from Five9 shareholders.

A branch of the U.S. Department of Justice was reviewing the deal out of concern of potential foreign participation, according to a letter dated Aug. 27, that was sent to the Federal Communications Commission. But Zoom said last week, when news of the review was reported, that it still expected the deal to close in the first half of 2022.

Zoom went public just two years ago, and the coronavirus pandemic brought the company many new customers and considerable profit. It had $1.9 billion in cash and equivalents on its balance sheet at the end of July.

Zoom announced its intent to buy Five9 on July 19, marking the company’s first attempt to spend over $1 billion on a transaction. It was the third-biggest tech deal announced this year, behind Microsoft-Nuance, at $19.7 billion including debt, and Square’s agreement to buy Australia’s Afterpay for $29 billion, which amounted to a 30% premium. On July 27, when Five9 reported its quarterly results, the company declined to issue quarterly or full-year guidance as a result of the then-pending deal.

While some large tech acquisitions, most notably in the semiconductor industry, have been scuttled of late by regulators, it’s highly unusual for companies to willingly terminate their own deal.

Proxy advisory company Institutional Shareholder Services had recommended shareholders vote down the proposal, CNBC reported on Sept. 17.

One issue for Five9 shareholders might have been the small premium that Zoom was set to pay. At the agreed upon price, Five9 shareholders were only going to receive a 13% bump in the value of their shares over where they were trading prior to the agreement. Given the momentum in cloud software and all of the money investors have been pouring into Five9’s peers, a significantly higher premium was likely needed to get shareholders on board.

The two companies will maintain support for integrations of their products, according to the statement.

This is breaking news. Please check back for updates.

— CNBC’s Ari Levy contributed to this report.

United’s unvaccinated staff drops from 593 to 320 after airline said it would fire them

A United Airlines airplane takes off at San Francisco International Airport.

Gary Hershorn | Corbis News | Getty Images

United Airlines said Thursday that more employees have uploaded proof of a Covid-19 vaccination, driving down the number of staff facing termination for not complying with the company’s inoculation mandate by almost half.

The Chicago-based airline started the process of firing 593 workers as of Tuesday, though final separation takes weeks. More employees this week uploaded their cards, and by Thursday, just 320 employees hadn’t done so.

United has the strictest vaccine mandate policy of any U.S. airline. In August, the company told its 67,000 U.S. employees that they must be vaccinated against Covid-19 this fall to continue working there. Some 2,000 United employees have sought exemptions for medical or religious reasons.

“Our vaccine policy continues to prove requirements work — in less than 48 hours, the number of unvaccinated employees who began the process of being separated from the company has been cut almost in half, dropping from 593 to 320,” United said in a statement.

Earlier Thursday, Tyson Foods, which also mandates vaccines, said more than 90% of its 120,000-person workforce has been vaccinated against Covid.

Increasingly, large U.S. companies are implementing Covid vaccine mandates for at least some workers.

Most airlines have opted to encourage, but not require, staff be vaccinated but have told staff that the Biden administration’s plan to mandate vaccines for large companies could change that.

Southwest Airlines CEO Gary Kelly has said he does not believe the company should mandate vaccines but warned employees this week that federal mandates could require staff to be vaccinated.

“So we at Southwest Airlines may be compelled by federal law to require Employees to be vaccinated, and we will be prepared for that,” Kelly told staff on Wednesday.

Kelly, however, said vaccines could end the pandemic. The airline earlier this month joined other carriers in offering extra pay for staff who get vaccinated and share their status with the company.

“This pandemic has to be defeated or we will never get back to normal and achieve prosperity,” he said. “We are still losing money. We risk job security. We risk pay raises.”

Frontier Airlines’ CEO Barry Biffle told employees this week that the carrier will postpone its plan to require that unvaccinated employees regularly test for Covid-19 starting next month. Instead, the Denver-based airline will wait for federal guidelines on vaccination and testing requirements for large companies.

“Once it has been issued, we will assess whether any adjustments need to be made to our plan,” he said in a staff note.

Biffle said the “majority” of Frontier’s 5,400 employees are vaccinated but the company didn’t immediately provide a percentage.

— CNBC’s Amelia Lucas contributed to this article.

Shares of Lordstown Motors surge on reported deal with Foxconn

The Lordstown Motors factory is where GM once operated, in Lordstown, Ohio, on October 16, 2020.

Megan Jelinger | AFP | Getty Images

Shares of Lordstown Motors surged by as much as 21% on Thursday following reports the embattled electric vehicle start-up is “near an agreement” to sell its large Ohio factory to iPhone maker Foxconn.

The companies are set to announce the deal as soon as later Thursday, according to Bloomberg News, which first reported the talks.

Lordstown, which went public in October through a SPAC deal, saw its stock rise as high as $8.93 a share Thursday before retreating to $8, up about 9%. The company is valued at $1.4 billion.

Lordstown has been strapped for cash as it attempts to begin production of its first vehicle, an all-electric pickup truck called the Endurance. The company in June said there was “substantial doubt” about its ability to continue as a going concern in the next year because of problems funding the production of the Endurance.

While Taiwan-based electronics contract manufacturer Foxconn is best known for iPhone production, it’s attempting to broaden its manufacturing to electric vehicles. Most notably, the company earlier this year finalized a deal with Fisker, another EV start-up that went public through a SPAC, for electric vehicle production.

The value of the reported deal between Lordstown and Foxconn is unknown at this time, according to Bloomberg. Spokespeople with Lordstown Motors and Foxconn did not immediately respond for comment or declined to comment.

The EV start-up purchased the massive facility in Lordstown, Ohio, in 2019 from General Motors, which ceased operations at the plant as part of a restructuring plan. The start-up reportedly bought the facility for $20 million, a fraction of its overall value, and GM has assisted the company both financially and operationally with suppliers.

GM owns 7.5 million shares of Lordstown Class A common stock. It received the shares in exchange for equity value of $75 million in the EV company, most of which were in-kind services and linked to the sale of the property.

Workers install door hinges to the body shell of a prototype Endurance electric pickup truck on June 21, 2021 at Lordstown Motors’ assembly plant in Ohio.

Michael Wayland / CNBC

Aside from its financial troubles, Lordstown is under investigation by the Securities and Exchange Commission and Department of Justice regarding its deal to go public as well as potentially false or misleading statements from former management, including company founder and ex-CEO Steve Burns.

Burns and his CFO left the SPAC-backed company in June after an internal investigation found “issues regarding the accuracy of certain statements” around Lordstown’s preorders, specifically the seriousness of the orders and who was making them.

In May, short seller Hindenburg Research said the company misled investors, including using “fake” orders to raise capital for its Endurance electric pickup. The short seller also said the pickup was years away from production. Lordstown has maintained it’s on track to start making the vehicle in September.

Lordstown previously said the internal investigation found Hindenburg’s report “is, in significant respects, false and misleading.”

Marc Lasry resigns as chair of Ozy Media

Marc Lasry, Chairman, CEO and Co-Founder of Avenue Capital Group, speaks during the Skybridge Capital SALT New York 2021 conference in New York City, September 15, 2021.

Brendan McDermid | Reuters

Billionaire investor Marc Lasry announced Thursday he will step down as chairman of Ozy Media, just days after The New York Times reported the company’s COO impersonated a YouTube executive on a call with potential investor Goldman Sachs.

Lasry, who is also owner of NBA champions the Milwaukee Bucks and CEO of Avenue Capital Group, was named chairman of Ozy Media exactly three weeks ago.

“I believe that going forward Ozy requires experience in areas like crisis management and investigations, where I do not have particular expertise,” Lasry said in a statement announcing his move. He added that he remains an investor in Ozy Media.

The New York Times story published Sunday night called into question many of the promotional and journalistic practices at Ozy Media, a digital media start-up. According to the New York Times story and several follow-up reports in other outlets, Ozy Media routinely inflated its viewership numbers on YouTube and other platforms.

Most notably, the company’s board excused the behavior of its COO Samir Rao who allegedly impersonated the YouTube executive, by blaming the incident on Rao’s mental health. The company’s board announced Tuesday that it asked Rao to take a leave of absence while it investigated the claims in the Times’ report.

This is breaking news. Please check back for updates.

States with cheapest electricity prices

2021 has been a great year for bitcoin mining in America as new talent — and equipment — flood the market, but some states are definitely more appealing destinations than others.

The latest data from the Global Energy Institute shows the average price of electricity is lowest in states including Texas and Washington, which certainly jibes with the fact that both states are increasingly hot destinations for minting new digital coins.

While the cost of power isn’t everything when deciding where to set up shop, it sure goes a long way.

Miners at scale compete in a low-margin industry, where their only variable cost typically is energy, so they are incentivized to migrate to the world’s cheapest sources of power.

The price of power across the U.S. varies.

In California and Connecticut you will pay anywhere from 18 to 19 cents per kilowatt hour, whereas in Texas, Wyoming, Washington, and Kentucky, you will pay less than half that, according to the Global Energy Institute, which puts out an annual electricity price map of the country, using the most recent full year of data available from the U.S. Energy Information Administration.

The institute does warn, however, that “while the energy mix available within a state will play a large role in state electricity prices, energy-limiting policies in some states act to artificially elevate prices, making the price of electricity much higher for consumers and businesses.”

Ultimately, what bitcoin miners care about most is finding cheap sources of electricity.

This is part of why the U.S. proves especially appealing to prospective miners, given the country is home to some of the cheapest sources of energy on the planet, many of which tend to be renewable. 

Fred Thiel, CEO of cryptocurrency mining specialist Marathon Digital Holdings, expects most new miners relocating to North America to be powered by renewables, or gas that is offset by renewable energy credits.

“Mining is price sensitive, so as to seek out the lowest-cost power and the lowest-cost power tends to be renewable because if you’re burning fossil fuels … it has extraction, refinement and transport costs,” Blockstream CEO Adam Back said. 

Washington state is a mecca for hydropowered mining farms, while Texas’ share of renewables is growing over time, with 20% of its power coming from wind as of 2019.

Electricity costs, however, aren’t everything. Friendly policymakers and sufficient infrastructure are also key factors.

Take Texas.

It has a deregulated power grid that lets customers choose between power providers, and crucially, its political leaders are pro-crypto — dream conditions for a miner looking for a kind welcome and cheap energy sources.

“You are going to see a dramatic shift over the next few months,” said bitcoin mining engineer Brandon Arvanaghi. “We have governors like Greg Abbott in Texas who are promoting mining. It is going to become a real industry in the United States, which is going to be incredible.”

The U.S. has also spent years investing in cryptomining infrastructure, long before it was popular.

When bitcoin crashed in late 2017 and the wider market entered a multiyear cryptocurrency winter, there wasn’t much demand for big bitcoin farms. U.S. mining operators saw their opening and jumped at the chance to deploy cheap money to build up the mining ecosystem in the States. 

“The large, publicly traded miners were able to raise capital to go make big purchases,” said Mike Colyer, CEO of digital currency company Foundry, which helped bring over $300 million of mining equipment into North America.

Companies like North American cryptomining operator Core Scientific kept building hosting space all through the depths of the period so that they had the capacity to plug in new gear, according to Colyer. Core, which has operations in North Dakota, North Carolina, Georgia, and Kentucky, is one of the largest providers of blockchain infrastructure and hosting in North America.

Lobbying kept carried interest out of Biden’s tax plan, Bernstein says

WASHINGTON — Fierce lobbying by the private equity industry is the reason that the carried interest tax rate is not included in President Joe Biden’s planned tax hikes, top White House economist Jared Bernstein told CNBC Thursday.

Biden and congressional Democrats are hoping to pass a sprawling budget, much of which is paid for with revenue from a laundry list of tax changes, including higher rates for the wealthiest Americans and corporations.

But closing the so called “carried interest loophole” by taxing private equity profits at personal income rates, instead of at lower capital gains rates, is not on that list.

Squawk Box anchor Andrew Ross Sorkin pressed Bernstein on how this simple change, long championed by Democrats in Congress, managed to avoid being on the list.

“This is such a glaring privileged position for a certain group of people over just about everybody else,” said Sorkin. “For those that look at the tax policy as a part of a democracy, where people have to believe in it. ‘they say, this makes no sense.'”

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“You make a good point,” Bernstein replied.

“This is a loophole that absolutely should be closed,” he said. But “when you go up to Capitol Hill and you start negotiating on taxes, there are more lobbyists in this town on taxes than there are members of Congress.”

Indeed, last year 4,108 individual lobbyists formally registered to lobby Congress and the Executive Branch on the issue of taxes, according to the Open Secrets lobbying database. Hundreds more likely worked to influence federal tax policy on behalf of clients, but did not formally register as lobbyists.

For private equity firms, keeping their tax rate at the lower capital gains level is their top priority in Washington, and has been for years.

The private equity industry has spent millions of dollars on lobbyists to fight any effort to change how they are taxed. And so far, the plan appears to be working.

They’ve contributed hundreds of millions of dollars to congressional campaigns, $600 million total over the past decade, according to a New York Times analysis earlier this year.

During the 2020 election, Biden’s presidential campaign received over $3 million from those working in private equity and various other types of investment funds, according to data from the nonpartisan Center for Responsive Politics. He was the top recipient of campaign money from that industry last cycle.

Nearly 60% of campaign donations from those in the private equity industry during the 2020 election went toward Democratic candidates for federal office.

CNBC’s Brian Schwartz contributed to this article.

Pfizer Covid booster recipients ‘want a normal Thanksgiving’ after getting third shots

Lalain Reyeg administers a COVID-19 booster vaccine and an influenza vaccine to Army veteran Gary Nasakaitis at the Edward Hines Jr. VA Hospital on September 24, 2021 in Hines, Illinois.

Scott Olson | Getty Images

Massachusetts resident Preston Alexander, 66, was elated when he found out last week he was eligible to receive a booster dose of Pfizer and BioNTech’s Covid-19 vaccine.

Alexander, whose wedding photography business went under during the pandemic, worried about his level of protection against the virus heading into the fall and winter when the delta variant is expected to circulate alongside the seasonal flu. After CDC Director Dr. Rochelle Walensky signed off Friday on boosters for a wide array of Americans, including those age 65 and older, he immediately called his local pharmacy to set up an appointment.

The photographer and videographer regularly worked large parties and weddings with 200 to 300 people, he said.

“I am definitely not going to subject myself to others when they’re not even wearing masks and they’re dancing on the dance floor like it’s 1999,” he said in a phone interview. He got a third dose of the Pfizer vaccine on Saturday.

Four people interviewed by CNBC – among the first Americans to receive booster shots in the United States – said they got the extra doses over the fear that they could expose themselves or their loved ones to the delta variant and become severely sick.

The strain has led to a surge in U.S. hospitalizations, mainly among the unvaccinated. Still, some vaccinated Americans have suffered so-called breakthrough infections and just over 19,000 of them – less than 1% – have been hospitalized or died with Covid as of Sept. 20, according to data compiled by the Centers for Disease Control and Prevention.

Scientists say vaccine protection against infection generally starts to wane six months after the second shot. Federal health officials hope boosting the U.S. population will continue to ensure long-term and durable protection against severe disease, hospitalization and death. Other countries, including Chile and Israel, have already started offering third doses to many of their citizens.

On Friday, Walensky approved a series of recommendations, including distributing the shots to older Americans and adults with underlying medical conditions beginning six months after their first series of inoculations. She also cleared booster shots for those in high-risk occupational and institutional settings, such as health-care workers and teachers, overruling the agency’s Advisory Committee on Immunization Practices after it rejected the same proposal.

The new policy will make third doses of the Pfizer-BioNTech Covid vaccine available to roughly 60 million people, 20 million of whom were immediately eligible as the highly contagious delta variant continues to tear across the country, President Joe Biden said Friday.

Alexander of Massachusetts said he viewed the extra doses as a “blessing.” He noted the side effects from the third Pfizer shot were similar to the ones he experienced after the first and second doses.

“I didn’t expect anything major when I got my booster,” he said. “I still had a painful arm for a day and a half. No headache, fatigue, no nothing. Just an incredible sense of peace of mind.”

Three other people who received Pfizer’s booster shot also said they felt better after getting the extra dose and experienced minimal side effects.

Karen Cobb of Sanbornton, New Hampshire looks after her two granddaughters, ages two and four. The 69-year-old said she got a booster shot at her local CVS on Sunday because she didn’t want to give the virus to her grandchildren, who are currently ineligible to get vaccinated.

“I’m the treasurer of my town, and even though everyone in the office was fully vaccinated, there was an outbreak. Two women got Covid, and I was exposed to them,” she said.

Preston Alexander

Source: Preston Alexander

Cobb, who also suffers from autoimmune diseases, said her arm was sore on Monday, and on Tuesday, she suffered from headaches and nausea that lasted through the morning.

“But luckily I was able to rest,” she said. “I feel better now that I’ve had the booster about going back to work,” she added.

California resident Wayne Adams, 62, got his Pfizer booster Monday at his local Walgreens. Adams, who has underlying health conditions, said getting the third shot took about 45 minutes, and was painless besides the initial jab.

His job in public transit is considered essential, “so I didn’t have the option of working from home. I didn’t want to bring it home to my wife or other members of my family,” he said.

“I want to have a normal Thanksgiving, Christmas, birthday parties for my children and grandchildren, and it’s the right thing to do and the vaccine is the path forward for us all,” he said.

Alberto Jacinto, 29, said he lied to get a third dose of the Pfizer vaccine, telling his local pharmacy that he had a medical condition.

He said he felt he needed to get a booster because he was moving for work to a city in northwest Texas that has a low vaccination rate. He said he got his extra dose in late August after he discovered a CVS was offering third shots.

“It’s a college town, and so I wasn’t gonna take any risks with the students here,” he said.

Disney’s Galactic Starcruiser launches March 2022, bookings start this October

Disney’s Halcyon starcruiser will make its maiden voyage on March 1, 2022.

First teased during Disney’s D23 Expo in 2019, the Star Wars: Galactic Starcruiser is an immersive hotel situated near the company’s Orlando, Florida-based Disney World Resort. Billed as a two-day, two-night adventure, this new experience will begin booking Oct. 28.

Voyage rates will depend on your itinerary, the time of year you book your trip and how many people are staying in your cabin, but Disney revealed some sample pricing for future adventures in August.

For example, between the dates of Aug. 20, 2022, and Sept. 17, 2022, a trip on the Chandrila Star Line will cost $4,809 for two guests sharing a cabin, or $1,209 per person, per night.

Three guests (two adults and one child) sharing a cabin would cost $889 per guest, per night or around $5,299 for the full trip.

Four guests per cabin (three adults, one child) costs $5,999 or $749 per guest, per night.

Prices shift based on which cabin you select. There are standard rooms and suites. The trip includes admission tickets to the Hollywood Studios park as well as breakfast, lunch and dinner for each day on the ship. Guests can travel to the Star Wars: Galaxy’s Edge park from the starcruiser during their stay and will have a voucher for a free quick-service meal at the park.

Congress moves to pass funding bill

A visitor runs around the Washington Monument near the U.S. Capitol at dawn, in Washington, U.S., September 29, 2021.

Tom Brenner | Reuters

Congress will race to prevent a government shutdown Thursday with hours to go before a midnight deadline.

The Senate plans to move first to pass a short-term appropriations bill that would keep the government running through Dec. 3. Barring delays, the House would then approve the plan and send it to President Joe Biden before funding lapses.

The legislation includes money for hurricane relief and the resettlement of Afghan refugees.

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A government shutdown could lead to furloughs of federal workers and the suspension of certain services. A funding lapse could pose particular challenges during U.S. efforts to fight the coronavirus pandemic — though the Biden administration has said a shutdown would have little effect on public health functions.

Congress can snuff out one possible crisis Thursday but has another looming. Lawmakers still need to raise or suspend the debt ceiling before Oct. 18 to prevent a default on U.S. debt that would result in job losses, economic damage and a drop in the stock market.

Democrats, who control both chambers of Congress, tried to fund the government and suspend the debt ceiling as part of the same bill. Senate Republicans blocked the legislation, even though extending the ceiling doesn’t mean new spending. Approval would authorize the Treasury to cover its existing obligations.

Senate Minority Leader Mitch McConnell, R-Ky., has said his party will vote for a funding bill without a suspension of the debt ceiling.

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Weekly jobless claims rise more than expected to 362,000

Initial jobless claims climbed again last week, rising to 362,000 as hiring appeared to remain sluggish while the U.S. continues to fight against the delta variant.

Economists surveyed by Dow Jones had been expecting 335,000 new filings, the same number as the upwardly revised total from the previous week.

The total was the highest since the 377,000 for the week ended Aug. 7 and indicates that hiring may be slowing at a time when concerns are growing about the pace of the economic recovery and the impact the pandemic may have heading into autumn.

Markets reacted little to the news, with stock futures continuing to point higher and government bond yields around flat.

The four-week moving average for weekly claims, which smoothes volatility in the numbers, edged lower to 335,750.

Continuing claims, which run a week behind the headline weekly number, rose to 2.84 million, an increase of 131,000. The four-week moving average for continuing claims fell to 2.8 million, a drop of 15,750 and the lowest since March 14, 2020, the early days of the Covid-19 pandemic.

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