Cisco Systems, Inc. (NASDAQ:CSCO) is not being ripped off on its new takeover deal for Acacia Communications, Inc. (NASDAQ:ACIA). Those are sentiments echoed by CEO Chuck Robbins after the networking giant decided to increase its original purchase price by 64%.
Cisco - Acacia Deal
Going by the amount of premium Cisco is willing to pay, the protracted and contentious deal is back on track. Under the revised deal, the networking-equipment giant is to pay $115 a share for Acacia.
The new deal is an improvement from a $70 a share deal that Cisco had inked last year. The revised deal values the maker of optical interconnects technologies at about $4.5 billion. In defense of the new deal, Cisco says Acacia CEO Raj Shanmugaraj and the team have managed the company very well over the past 18-months and exceeded metrics in the initial deal model.
Acacia having a stellar 2020 is another factor believed to have played a role in Cisco increasing its initial deal by 64%. The company has already accepted the improved deal after terminating the initial deal last week.
In defense of terminating the deal, Acacia had claimed Cisco had not secured timely regulatory approvals from Chinese authorities. Cisco hit back, disputing the claims conversely suing Acacia in Delaware Chancery Court.
Merger Synergies
Cisco would love to keep the standoff behind to focus on completing the $4.5 billion in the first quarter. The acquisition is big for Cisco as it stands to gain access to key technologies on the development of high speed optical interconnects technology for networking systems.
In support of the deal, Acacia CEO expects Cisco to help the company better support existing customers while reaching an expanded footprint of new customers globally. The executive expects the deal to transform the optical industry and provide great opportunities for Acacia employees.
Acacia stock was up by more than 30% after it became clear it is poised to merge with Cisco. In contrast, Cisco stock fell 0.46%.