January 14, 2021
Remember that time – mere days ago – when Cisco Systems and Acacia Communications were fighting over a merger that had gone sour? Never mind. It's all sweet and good now.
The sides have found common ground under an amended merger deal announced Thursday. Cisco has agreed to acquire Acacia for $115 per share in cash, or roughly $4.5 billion on a fully diluted basis, net of cash and marketable securities. That's well above Cisco's initial agreement to acquire Acacia for $70 a share, or $2.6 billion, back in July 2019.
Word of today's deal sent Acacia stock soaring – it was up $27.28 (31.56%), to $113.73 each, in Thursday morning trading. At last check, Acacia's market capitalization hovered at $4.79 billion.
The deal remains subject to Acacia stockholder approval, but the companies expect to wrap up the transaction by the end of Q1 2021. Acacia employees, including CEO Raj Shanmugaraj, will then join Cisco's optics business.
The deal, which would elevate Cisco as a leader in pluggable and interoperable coherent optics, had been in doubt. Late last week, Acacia argued the Chinese government hadn't cleared the merger in time. Cisco disputed that position, holding that it was in fact cleared by China's State Administration for Market Regulation (SAMR).
Cisco had also won a temporary restraining order to prevent Acacia from terminating its merger agreement, tossing everything into a holding pattern. Acacia, meanwhile, filed a counterclaim against Cisco in a Delaware court on Monday (January 11), seeking a declaration that Acacia's termination of the merger was valid. With a new, sweetened deal in hand, that's all water under the bridge.
With both sides now happy, Cisco says the acquisition "reinforces" its commitment to optics and shores up a strategy focused on coherent optical technologies and products. Cisco also pledged to support Acacia's existing and new customers that require coherent optics, digital signal processing/photonic integrated circuit modules and transceivers for use in networking products and data centers.
The new deal comes together just days after Shanmugaraj offered an upbeat view of Acacia's trajectory, citing, in part, increased demand for coherent interconnects from cloud providers, telcos and cable networks. Acacia announced last week it expects to post Q4 2020 net income in the range of $31.7 million to $35.4 million on revenues of $160 million to $164 million, handily beating year-ago results.
— Jeff Baumgartner, Senior Editor, Light Reading
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