Cisco Spars With Acacia Communications Over Takeover Deal -- 2nd Update
January 08 2021 - 12:25PM
Dow Jones News
By Dave Sebastian
Acacia Communications Inc. is scrapping a plan to sell itself to
Cisco Systems Inc. for roughly $2.6 billion, though the
networking-equipment giant is aiming to muscle its way to
completing the deal.
Cisco agreed to buy Acacia, a maker of optical interconnect
technologies such as modules and semiconductors, in July 2019 for
$70 a share in cash. The San Jose, Calif.-based company said
Acacia's technology would enable users of its hardware such as
data-center operators and telecom-service providers to drive more
data over high-speed internet networks.
On Friday, Acacia said the deal hadn't received the Chinese
government's approval of the combination within the prescribed time
frame, a claim Cisco disputes. The Maynard, Mass.-based company
said that it has the right to walk away from the transaction and
that it wouldn't be eligible for a $120 million deal-termination
payment from Cisco.
Cisco, meanwhile, said the purchase has received approval in
China, noting that its submission to regulators was "sufficient to
address the relevant competition concerns." The company said it is
seeking Delaware Chancery Court confirmation that it met all
conditions for the combination and for a court to order Acacia to
close the deal.
Acacia shares rose more than 12% in Friday trading, while Cisco
shares were up slightly. Acacia derived 15% of its revenue for the
first nine months of 2020 from Cisco, the company has said in
securities filings.
Cisco was among companies expected to face scrutiny from Chinese
government agencies as part of a potential blacklist used to punish
U.S. technology firms in response to Washington's restrictions on
telecom giant Huawei Technologies Co., The Wall Street Journal
reported in September.
The company, which competes with Huawei, already has lost
contracts to supply some of its long-term Chinese customers, such
as China's large state-owned telecom carriers.
Smartphone chip maker Qualcomm Inc.'s scrapped a planned $44
billion acquisition of Dutch chip maker NXP Semiconductors NV in
2018 after a deadline to gain approval from Chinese regulators
passed. Other big tech deals are up for regulatory scrutiny there,
including Nvidia Corp's. plan to buy chip-design company Arm from
SoftBank Group Corp. British antitrust regulators this week said
they were reviewing the proposed acquisition.
Cisco has gobbled up firms in the optics space such as Lightwire
Inc., CoreOptics Inc. and Luxtera Inc. in recent years. The Acacia
acquisition would have been Cisco's biggest since 2017.
Cisco's business has been hampered as companies cut back on
purchases of networking equipment during the Covid-19 pandemic. For
the quarter ended Oct. 24, Cisco's revenue fell 9% from a year
earlier, while its profit declined 26%.
Meanwhile Acacia posted a 61% increase in profit for the quarter
ended September on a 32% rise in revenue, driven by sales of
embedded modules.
Write to Dave Sebastian at dave.sebastian@wsj.com
(END) Dow Jones Newswires
January 08, 2021 12:10 ET (17:10 GMT)
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