January 14, 2021

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Acacia stock surges after Cisco agrees to larger takeover deal


Shares of Acacia Communications Inc. are surging more than 30% in Thursday morning trading after Cisco Systems Inc. made an upsized offer for the optoelectronics company.

Cisco
CSCO,
-0.56%

has agreed to acquire Acacia
ACIA,
+31.46%

for $115 a share in cash in a deal valued at roughly $4.5 billion. Shares of Cisco are off 0.6% in morning trading.

Cisco had originally intended to purchase Acacia for $70 a share in a deal valued at $2.6 billion through an agreement reached in July 2019, but the companies revealed a dispute late last week. Acacia said it was terminating the deal arrangement because approval from Chinese regulators hadn’t come in time, while Cisco said it had obtained the necessary approvals. Both companies had vowed legal action against one another.

Some analysts suspected at the time that Acacia was backing out of the deal as a means of driving new deal talks for a higher takeout price.

Cisco and Acacia expect this new deal to close by the end of the first calendar quarter of 2021.

“We maintain our strong conviction in the strategic benefits of joining the Cisco family and believe it will enable us to better support our existing customers, while reaching an expanded footprint of new customers globally,” Acacia Chief Executive Raj Shanmugaraj said in a release.

Cisco argues that the deal with “ignite our strategy to transform the optical world as we know it, with innovative solutions to boost network capacity inside and outside the data center,” according to Bill Gartner, the senior vice president for Cisco’s optical systems and optics group.

Shares of Cisco have gained 13% over the past three months while shares of Acacia have risen 68%. The S&P 500
SPX,
+0.21%

is up 9% over that span.



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