The dust has settled! Cisco to buy Acacia for $4.5 billion

On January 14, local time, Cisco and Acacia jointly announced that the two parties had revised the final merger agreement and reached a consensus, thus ending the nearly one-week merger dispute between the two parties.

Under the terms of the revised agreement, Cisco has agreed to acquire Acacia for $115 per share in cash, or approximately $4.5 billion in fully diluted cash or marketable securities.

The deal, which still needs to be approved by Acacia shareholders, is expected to close by the end of the first quarter of 2021. At that time, Acacia employees, including CEO Raj Shanmugaraj, will join Cisco’s Optical Networking business unit.

There has been an “Oolong reversal” in this acquisition. On January 8, 2021, Acacia announced the termination of the merger agreement with Cisco. The reason was that “the approval from the State Administration for Market Regulation (SAMR) of China was not obtained within the time limit specified in the merger agreement”.

Cisco later said it had met all conditions to complete the acquisition of Acacia, including approval from China’s State Administration for Market Regulation (SAMR). And Acacia sued the Chancery court in Delaware, asking the court not to terminate the merger agreement until the disputed issues of the transaction were resolved.

On Jan. 11, Acacia announced that it had filed a pleading and an active defense against Cisco’s appeal. At the same time, it filed a countersuit against Cisco, asking the court to declare that Acacia’s termination of the merger agreement with Cisco was valid. Acacia argues that a Jan. 7, 2021, email from SAMR, which Cisco purports to send, that Cisco’s submission “is sufficient to address the relevant competition concerns” does not constitute regulatory approval.

Cisco Chairman and CEO Chuck Robbins tweeted on January 11: “Thank you very much to China’s State Administration for Market Regulation (SAMR) last week for approving Cisco’s acquisition of Acacia. We appreciate SAMR’s timely approval of this transaction. Respect. We agree to take a series of measures to protect the interests of Chinese customers and look forward to continuing to strengthen cooperation with Chinese partners.”

According to Bloomberg, Cisco’s lawyers said Acacia believed its valuation had increased since the deal was signed, and Acacia tried to back out of the deal to get a higher offer.

The final deal shows that the $4.5 billion price is well above the $70 per share or $2.6 billion purchase price originally agreed in July 2019, an increase of more than 70%.

The Links:   FF900R12IP4 LTM10C209A