Semiconductor maker Acacia Communications said it has terminated its $2.6 billion merger agreement with Cisco, saying it had not received approval from China’s State Administration for Market Regulation before the January 8 deadline.

“The proposed merger, announced in July 2019, was conditioned on the satisfaction or waiver of customary closing conditions, including obtaining necessary regulatory approvals within the timeframe contemplated by the merger agreement,” Acacia stated. Without regulators’ approvals, the company said, it did not have an obligation to close.

Cisco had agreed to acquire Acacia for $70 per share, a premium of 46%. Acacia shares were up more than 17% Friday following the announcement. The deal had been expected to close in the second quarter of 2020. Acacia employees would have joined the networking and security division’s optical-systems business.

On Friday, Cisco was seeking a court order to close the deal following the announcement by Acacia.

In a statement, Cisco said it was seeking confirmation from the Delaware Court of Chancery that it had met closing conditions. “Cisco is also seeking a court mandate that the agreement may not be terminated until the court resolves these matters,” the company said.

Acacia said Cisco agreed to a $120 million payment obligation if the merger were terminated over failures to obtain regulatory approvals but it waived the approval requirement and was not entitled to any payment.

Yesterday, Cisco said, it was notified by China’s regulator that its submission was “sufficient to address the relevant competition concerns.”

In 2019, Cisco cited the growing number of customers transitioning from chassis-based systems to pluggable technology as the rationale for the deal.

The merger had previously been approved by regulators in the United States, Germany, and Austria.

Acacia is planning a conference call on January 11.

Cisco shares are up 15% over the last three months, compared with a 10% increase for the Dow Jones Industrial Average.

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