On Friday, Acacia Communication (NASDAQ: ACIA) terminates its merger agreement with network equipment giant Cisco systems (NASDAQ: CSCO). Acacia said the decision, which takes effect immediately, is due to the State Administration for Market Regulation (SAMR) in China, China, not approving the agreement in a timely manner.
Cisco was quick to respond with a brief press release stating that it wants to confirm to the Delaware Court of Chancery that all conditions are met. This includes the approval of SAMR, which according to Cisco was received on Thursday, January 7th.
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Cisco said it also wants a court mandate that the agreement may not be terminated until the court resolves these issues, and that the court should issue an order for Acacia to close the deal. ‘
In its press release, Acacia, a manufacturer of optical network technologies, essentially said it would challenge this move.
The deal was originally announced in July 2019, with the two companies agreeing that Cisco would pay $ 70 per share for Acacia in cash worth $ 2.6 billion. At the time, the price was a 46% premium to the value of Acacia shares prior to the announcement.
At the time, David Goeckeler, general manager of Cisco, a network and security company, said that owning the Chinese company ‘allows us to build on the strength of our switching, routing and optical network portfolio to meet the most demanding to meet the requirements of our customers. ‘
This will also give it a direct connection to the massive Chinese market. Its sales in the country were relatively limited and generally struggled with growth.
On Friday, Acacia shares closed nearly 10% higher, with Cisco on the day.