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Cisco to purchase Acacia Communications

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Cisco, a global giant and provider of IT, networking and cybersecurity solutions, has announced that it has received the final regulatory approval for a $4.5 billion agreement to purchase Acacia. The merger was reportedly approved by the Chinese government’s State Market Regulatory Administration (SAMR) on Tuesday. The consent from SAMR was the last hurdle to clear for Cisco to complete the deal.

 

Cisco’s plans to acquire Acacia Communications were first announced in July of 2019. The deal was on a fully diluted basis to buy the company for $70 per share in cash for a total of $2.6 billion. Cisco had then received the regulatory go-ahead from the United States, Germany and Austria.

 

Cisco has received the approval under certain conditions. According to SAMR, the deal could progress as long as Cisco and Acacia continue to fulfill existing contracts in China, as well as supply Chinese companies in accordance with the principles of fairness, reasonableness and non-discrimination.

 

Last week, Cisco announced an increase in its initial offer to Acacia from $70 per share to $115 per share in cash, or about $4.5 billion on a fully diluted basis. Both companies expect the new transaction to be completed in the first quarter of this year, subject to the usual terms of closing and sign-off by Acacia shareholders. When the deal is complete, Raj Shanmugaraj, CEO of Acacia, and his staff will join Cisco’s optics business.

 

In a letter to Acacia’s customers, signed by executives from both companies, it was stated: “We believe that the acquisition of Acacia by Cisco will further enhance Cisco’s silicon and optics portfolios, and will help accelerate the trend toward coherent technology and pluggable solutions while accommodating a larger footprint of customers worldwide. The team at Acacia will continue operating our business consistent with our practice prior to Cisco’s acquisition announcement, in order to continue to support your business needs through closing. Both Acacia and Cisco are looking forward to the combined benefits that we believe we will be able to provide to all of our customers upon completion of the acquisition.”