Cisco and Acacia Amends Merger Agreement

Cisco and Acacia Communications have amended the definitive merger agreement under which Cisco previously agreed to acquire Acacia. Under the terms of the amended agreement, Cisco would acquire Acacia for $115 per share in cash, or for approximately $4.5 billion on a fully diluted basis, net of cash and marketable securities.

Cisco and Acacia expect to complete the acquisition by the end of the first calendar quarter of 2021, subject to closing conditions, including Acacia stockholder approval. All Acacia employees including the CEO will join the Optics business division of Cisco.

It was two weeks ago that the merger of Acacia and Cisco became controversial when the former declined for the merger terms. Cisco Systems Inc.’s proposed $2.6 billion merger with Acacia Communications Inc. was destined for court after Acacia announced that it was terminating the agreement on grounds.

On January 8, 2021, Acacia delivered a termination of the proposed acquisition notice to Cisco. The transaction was conditioned on the satisfaction, or mutual waiver of agreed-upon closing conditions, including obtaining necessary regulatory approvals. The merger agreement afforded the parties 18 months to obtain the necessary antitrust approvals from the Chinese government before, as Acacia asserts, either Acacia or Cisco could terminate the agreement on January 8, 2021.

Approval from the Chinese government was not received before January 8, 2021, and Acacia delivered a notice of termination of the merger agreement on that date. Cisco initiated litigation against Acacia in Delaware challenging the Company’s termination of the merger agreement, claiming that the Chinese Government’s State Administration for Market Regulation (“SAMR”) approval was received on January 7, 2021.

Acacia then said that the email from a SAMR employee on January 7, stating Cisco’s submission was “sufficient to address the relevant competition concerns” does not constitute regulatory approval, as Cisco claims. Acacia intends to vigorously defend itself against Cisco’s claims and vindicate its decision to terminate the merger agreement.

Cisco said that the pending acquisition of Acacia reinforces its commitment to optics as a critical building block that will enhance the company’s ‘Internet for the Future’ strategy with world class coherent optical solutions for customers, further enabling them to address the unprecedented scale of modern IT. Cisco will support Acacia’s existing and new customers around the world that require industry-leading coherent optics, digital signal processing/photonic integrated circuit modules, and transceivers for use in networking products and data centers.

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