RESEARCH TRIANGLE PARK – Cisco and Acacia Communications have put aside their legal differences over a failed acquisition to settle on terms for a new deal. But Cisco is going to have to pay an additional $1.9 billion for the optical communications tech firm.
The two firms agreed to a $2.6 billion merger in 2019 but Acacia moved to terminate the deal when it failed to receive approval from regulators. Cisco sued Jan. 8 to block the termination.
And on Thursday the companies dropped the legal fight, agreeing to a $4.5 billion deal, or $115 a share. Acacia (Nasdaq: ACIA) shares immediately soared to nearly match the Cisco (Nasdaq: CSCO) offer.
Why did Cisco CEO Chuck Robbins – a UNC-CH graduate – agree to the higher price to keep the deal alive?
“The revamped agreement puts those cases to rest and demonstrates how important optical systems – such as digital signal processing, photonic integrated circuit modules, and transceivers for use in networking products and data centers – are for Cisco now and in the future,” reports tech news site Reseller News.
The deal is expected to close this quarter, pending regulatory approval. Again.
Acacia CEO Raj Shanmugaraj will join Cisco; he and Acacia employees will become part of Cisco’s Optics business
“I am delighted that Cisco and Acacia have decided to come together in this mutual deal,” Robbins said in a statement. “We look forward to welcoming Raj and the Acacia team to Cisco to offer our customers world-class coherent optical solutions to power the Internet for the future.”
Added Shanmugaraj: “We maintain our strong conviction in the strategic benefits of joining the Cisco family and believe it will enable us to better support our existing customers, while reaching an expanded footprint of new customers globally. We are pleased to have reached this agreement with Cisco and are excited to move forward with the combination which we believe will transform the optical industry, while providing great opportunities for Acacia employees to continue their innovation.”
Cisco says optics technology is “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.”
“Both Cisco and Acacia have been focused on helping customers create a simpler operations environment, with a shared vision for the future of routing and switching with pluggable optics,” said Bill Gartner, senior vice president and general manager, Cisco Optical Systems and Optics Group, in a statement. “Together we will ignite our strategy to transform the optical world as we know it, with innovative solutions to boost network capacity inside and outside the data center.”
Cisco operates one of its largest corporate campuses in RTP.
