On Friday, Acacia Communications (NASDAQ: ACIA) terminated its merger agreement with the network equipment giant Cisco Systems (NASDAQ: CSCO). Acacia said the decision, which took effect immediately, is due to the fact that the State Administration of Market Regulation (SAMR) in the company’s home China did not approve the deal in time.
Cisco soon responded with a concise press release stating that it was seeking confirmation from the Delaware Chancellery Court that all conditions were, in fact, met. This includes the approval of SAMR, which Cisco claims to have received on Thursday, January 7.
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Cisco said it “is also seeking a court order so that the settlement is not terminated until the court resolves these issues, and a court order requiring Acacia to close the transaction.”
In its press release, Acacia – a manufacturer of optical network technologies – said it would essentially contest that measure.
The deal was originally announced in July 2019, with the two companies agreeing that Cisco would pay $ 70 per share for Acacia in a $ 2.6 billion all-cash deal. At that time, the price represented a 46% premium on the value of Acacia shares before the announcement.
At the time, Cisco general manager of network and security business, David Goeckeler, said that owning the Chinese company “will allow us to build on the strength of our switching, routing and optical network portfolio to meet our customers’ most demanding requirements” .
It would also give you a direct connection to the huge Chinese market. Its sales in the country have been relatively limited and it is generally struggling to grow.
On Friday, Acacia shares soared to close nearly 10% higher, with Cisco losing its balance on the day.