Shares of Acacia Communications, Inc. ACIA were rallying Thursday after a brief legal dispute with Cisco Systems, Inc. CSCO was resolved and the two sides struck a merger agreement.
What Happened: Acacia said last week it was terminating its merger agreement with Cisco after the deal failed to receive regulatory approval from Chinese authorities before a Jan. 8 deadline.
Cisco disagreed and said it received approval from China's State Administration for Market Regulation on Jan. 7.
Cisco filed a lawsuit against Acacia and argued it must abide by the terms of the deal as all conditions were met on time. Acacia filed a counterclaim, arguing its termination of the deal was justified.
On Thursday, the two sides confirmed a merger agreement. As part of an acquisition deal, Cisco will acquire Acacia for $4.5 billion, or $15 per share in cash.
Related Link: Will Zoom Or Cisco Stock Grow More By 2022?
Why It's Important: Cisco and Acacia "decided to come together in this mutual deal," Cisco CEO and Chairman Chuck Robbins said in the press release.
Cisco said the deal is part of its vision that optics will serve as a "critical building block" for the company's "internet for the future" strategy.
Acacia employees and CEO Raj Shanmugaraj will join Cisco's Optics business.
"Both Cisco and Acacia have been focused on helping customers create a simpler operations environment, with a shared vision for the future of routing and switching with pluggable optics," Bill Gartner, senior vice president and general manager for Cisco's optical systems and optics group, said in a statement.
"Together we will ignite our strategy to transform the optical world as we know it, with innovative solutions to boost network capacity inside and outside the data center."
What's Next: The acquisitions are expected to close by the end of the first quarter of 2021 and remain subject to closing conditions, including approval by Acacia investors.
"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," Acacia's Shanmugaraj said in a statement.
"We are pleased to have reached this agreement with Cisco and are excited to move forward with the combination which we believe will transform the optical industry, while providing great opportunities for Acacia employees to continue their innovation."
ACIA, CSCO Price Action: Acacia shares were up 31.84% at $113.98 at last check Thursday, while Cisco shares were down 0.23% at $45.26.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.