Cisco to buy Acacia Communications for $4.5bn

Cisco has agreed to buy Acacia Communications for around $4.5bn, sending shares in the latter surging on Thursday, after an initial deal between the two was terminated earlier this month.

Under the terms of the amended deal, which is expected to complete by the end of the first quarter, Cisco will pay $115 per share in cash for Acacia.

Once the deal completes, Acacia chief executive Raj Shanmugaraj and the company’s employees will join Cisco's Optics business.

Cisco chairman and CEO Chuck Robbins said: "I am delighted that Cisco and Acacia have decided to come together in this mutual deal. 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."

Bill Gartner, senior vice president and general manager of Cisco Optical Systems and Optics Group, said: "Both Cisco and Acacia have been focused on helping customers create a simpler operations environment, with a shared vision for the future of routing and switching with pluggable optics.

"Together we will ignite our strategy to transform the optical world as we know it, with innovative solutions to boost network capacity inside and outside the data centre."

Cisco had originally agreed to buy Acacia in July 2019 for $70 a share, or $2.6bn. However, Acacia Communications backed out of the merger agreement earlier this month, citing failure to get timely regulatory approval in China.

Cisco disputed this, however, insisting that it had met all conditions for closing of the deal, including the approval of China's State Administration for Market Regulation.

At 1500 GMT, Acacia shares were up 31% at $113.54.