Cisco Agrees to New Deal to Buy Acacia for $115 a Share -- Update
By Sarah E. Needleman
Cisco Systems Corp. said Thursday that it has struck a new deal
to buy Acacia Communications Inc., boosting the original purchase
price by 64%.
Networking-equipment giant Cisco said it would now pay $115 a
share for Acacia in a deal that values the maker of optical
interconnect technologies, such as modules and semiconductors, at
about $4.5 billion on a fully diluted basis.
San Jose, Calif.-based Cisco agreed in July 2019 to pay $70 a
share for Acacia, which last week moved to terminate the deal,
claiming that Cisco hadn't received timely approval from Chinese
regulatory authorities. Cisco disputed that claim and sued Acacia
in Delaware Chancery Court to compel the Maynard, Mass.-based
company to close the transaction under its previous terms.
A spokeswoman for Cisco said the company plans to file a motion
to dismiss with the lawsuit Thursday.
Acacia executives said on a call Monday that since the initial
agreement was announced, the company has benefited from stronger
demand from some customer groups as well as improvements in its
product portfolio and relationships with existing customers. The
company's share price has traded over the $70-a-share mark since
Cisco said it expects to complete the acquisition by the end of
the first calendar quarter, though Acacia shareholders still have
to approve the transaction. Acacia's chief executive, Raj
Shanmugaraj, and its roughly 440 employees would then join Cisco's
optics business, Cisco said.
The two companies share a vision for the future of routing and
pluggable optics, which are more cost-efficient than traditional
chassis-based systems, said Bill Gartner, the head of Cisco's
optics business, in a joint statement with Acacia. "Together we
will ignite our strategy to transform the optical world as we know
it," he said.
Mr. Shanmugaraj added that Acacia maintains its "strong
conviction in the strategic benefits of joining the Cisco
When the original deal was announced, Cisco said Acacia's
technology would allow users of its hardware -- such as data-center
operators and telecom-service providers -- to drive data over
high-speed internet networks more efficiently. Acacia derived
roughly 15% of its $419.3 million in revenue through the first nine
months of 2020 from Cisco. Acacia was founded in 2009 and went
public in May 2016.
Cisco has previously made several deals in the optics space,
acquiring companies such as Lightwire Inc., CoreOptics Inc. and
Acacia shares were up nearly 32% to $113.99 in midmorning
trading Thursday, while shares in Cisco rose slightly.
--Colin Kellaher contributed to this article.
Write to Sarah E. Needleman at email@example.com
(END) Dow Jones Newswires
January 14, 2021 13:02 ET (18:02 GMT)
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