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China’s Antitrust Regulator Approves Cisco’s Acquisition of Acacia Communications

The approval from China's State Administration for Market Regulation (SAMR) was the last remaining hurdle for the deal.

Video source: YouTube, Acacia Communications, Inc.

China’s antitrust regulator approved Cisco Systems' acquisition of Acacia Communications, just days after the deal almost fell apart.

On Tuesday, the State Administration for Market Regulation (SAMR) said it granted conditional approval for the $4.5 billion dollar merger, saying that the companies must ensure fair market competition and continue supplying certain products without discrimination or unreasonable terms. 

SAMR is also requiring Cisco and its merged entity to honor all contracts with existing clients in China for the next five years.

Earlier this month, Acacia – which provides high-speed optical interconnect products – sought to terminate the deal, upon which the companies had agreed a year and a half ago, claiming that Cisco had failed to get timely regulatory approval from Chinese authorities. 

In order for the combined company to continue doing business in China, SAMR approval was required. The acquisition already had received the green light from other countries, including the United States, Germany and Austria.

Cisco first unveiled plans to acquire Massachusetts-based Acacia in July 2019 as a way to capture a larger chunk of spending on 5G networks. In a joint memo announcing the deal, Cisco and Acacia said they believed it “will further enhance Cisco’s silicon and optics portfolios,” as well as “help accelerate the trend toward coherent technology and pluggable solutions.”

After Acacia moved to squash the merger, Cisco raised the purchase price by almost 70%, cementing a new deal, the Wall Street Journal reported.

According to a joint statement, the acquisition is expected to be completed by the end of the first quarter of 2021, and all Acacia employees will join Cisco’s optics business. 

"We maintain our strong conviction in the strategic benefits of joining the Cisco family and believe it will enable us to better support our existing customers, while reaching an expanded footprint of new customers globally," said Raj Shanmugaraj, president and chief executive officer of Acacia. "We are pleased to have reached this agreement with Cisco and are excited to move forward.”


Source: Equities News

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