Why the Cisco-Acacia Deal Is Sunk

By Chris Lange Published Jan 8, 10:50AM EST

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Why the Cisco-Acacia Deal Is Sunk — © Justin Sullivan / Getty Images

Acacia Communications Inc. (NASDAQ: ACIA) shares were up handily to close out the week after the announcement that it had ended its $2.6 billion merger agreement with Cisco Systems Inc. (NASDAQ: CSCO | CSCO Price Prediction). Acacia noted a lack of approval from Chinese regulators as a catalyst.

The company pointed out that it did not receive approval from the Chinese government’s State Administration for Market Regulation before the January 8 deadline. Cisco may be looking to challenge Acacia’s right to terminate the merger in court as a result.

The deal was agreed to in July of 2019. At that time, Cisco had signed on to pay roughly $70 per share for Acacia for an aggregate of $2.6 billion.

Acacia’s PR team released a statement:

Because approval of the Chinese government’s State Administration for Market Regulation was not received within the time frame contemplated by the merger agreement, Acacia did not have an obligation to close the merger before the arrival of the Jan. 8, 2021, extended end date.

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This deal was expected to close in the second half of Cisco’s fiscal year, which ends in July.

Excluding Friday’s move, Acacia Communications stock had underperformed the broad markets with a gain of only 6% in the past 52 weeks.

Acacia traded up about 11% on Friday, at $80.23 in a 52-week range of $60.62 to $81.00. The consensus price target is $70.00.

Cisco stock was trading at $45.01, in a 52-week range of $32.40 to $50.28. Analysts have a consensus price target of $48.27.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics. Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications. A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.