Cisco Agrees to New Deal to Buy Acacia for $115 a Share -- 2nd 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 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 early December.

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 family."

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 Luxtera Inc.

Acacia shares rose more than 31% to $113.64 in trading Thursday. Shares in Cisco closed 0.5% lower at $45.15.

--Colin Kellaher contributed to this article.

Write to Sarah E. Needleman at [e-mail]

(END) Dow Jones Newswires

January 14, 2021 17:20 ET (22:20 GMT)

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