Cisco to buy Acacia for $4.5 bn in on-again acquisition

Cisco and Acacia Communications will move ahead with the merger but the acquisition will cost around $2 billion more than the original price. Both the companies said that they have amended their acquisition agreement. So, Cisco will now buy Acacia for $4.5 billion. As per the original deal of 2019, Cisco planned to pay $2.6 billion for the optics vendor.

Though the deal still requires the approval of Acacia’s shareholders, the acquisition is expected to be closed by the end of the first quarter.

Under the agreement, Acacia CEO Raj Shanmugaraj and its employees will join Cisco’s Optics business.

“I am delighted that Cisco and Acacia have decided to come together in this mutual deal,” Cisco CEO Chuck Robbins said.

But the deal almost didn’t happen.

Earlie, Cisco announced its plans to acquire Acacia in July 2019 and the deal was expected to close by the end of that year. But the deal got stalled as the Chinese government’s State Administration for Market Regulation (SAMR) refused to approve the acquisition.

Late last week, Acacia said it terminated the acquisition because China didn’t greenlight it by Jan. 8. Cisco, however, said it did receive Chinese approval on Jan. 7, and filed a lawsuit to force Acacia to close the deal. On Monday, Acacia filed a countersuit.

Bringing Acacia’s coherent optical technology in house plays a critical role in Cisco’s Internet for the Future strategy and its plans to move deeper into the 5G infrastructure market.

“We look forward to welcoming Raj and the Acacia team to Cisco to offer our customers world-class coherent optical solutions to power the Internet for the future,” Robbins said.