Cisco agreed on Tuesday to acquire Acacia Communications for $2.6 billion ($70 per share in cash), on a fully diluted basis, net of cash and marketable securities. The price is about a 46% premium to Acacia’s $48.06 closing price yesterday.

Cisco’s stock was trading at $56.49 a share, up 53% on Tuesday. Acacia’s stock on Tuesday was at a 52-week high, trading at $64.98 a share, up 35%.

The acquisition will enhance Cisco’s portfolio of optical systems, a press release said.  Acacia is an optical networking semiconductor company and an existing Cisco supplier.

“With the explosion of bandwidth in the multi-cloud era, optical interconnect technologies are becoming increasingly strategic. The acquisition of Acacia will allow us to build on the strength of our switching, routing, and optical networking portfolio to address our customer’s most demanding requirements,” said David Goeckeler, executive vice president and general manager of Cisco’s networking and security business.

The acquisition is expected to close during the second half of Cisco’s fiscal year 2020, subject to customary closing conditions and required regulatory approvals.

Upon completion of this transaction, Acacia employees will join Cisco’s optical systems and optics business within the networking and security business under the auspices of Goeckeler.

Bill Gartner, Cisco’s senior vice president of optical Systems and optics, wrote in a blog on Tuesday, that “Acacia’s coherent optics technology empowers web-scale companies, service providers, and data-center operators to meet the fast-growing consumer demands for data.”

“Coherent technology has been a game-changer for optical networking and continues to evolve with the deployment of pluggable coherent optics,” explained Raj Shanmugaraj, Acacia’s president and CEO. “Upon close, Cisco and Acacia will continue to serve and support existing Acacia customers.”

He added that by integrating Acacia technology into Cisco’s networking portfolio, “we believe we can accelerate the trend toward coherent technology and pluggable solutions while accommodating a larger footprint of customers worldwide.”

Photo: PAU BARRENA/AFP/Getty Images

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