Acacia Says It’s Ending $2.6 Billion Merger Deal With Cisco

(Bloomberg) -- Acacia Communications Inc. said it's ending a merger deal with Cisco Systems Inc. after failing to get regulatory approval from China in time.

Cisco said in July 2019 that it planned to buy Acacia, an optical component maker, for about $2.6 billion to capture a bigger chunk of spending on 5G telecommunications networks.

Maynard, Massachusetts-based Acacia said in a statement Friday that it didn't receive approvals from the Chinese government's State Administration for Market Regulation within the time frame of the merger agreement, so it didn't have an obligation to close the merger before Jan. 8, 2021.

However, Cisco said in a separate statement that it's seeking confirmation from a court in Delaware that it has indeed met “all conditions for closing” the deal, including approval from China's regulator.

“Cisco is also seeking a court mandate that the agreement may not be terminated until the court resolves these matters, and an order from the court requiring Acacia to close the transaction,” according to the statement. Cisco said it was notified Thursday by the SAMR that its submission is “sufficient to address the relevant competition concerns.”

Cisco shares were little changed as the market opened in New York on Friday. Acacia jumped 8.7%.

Acacia's decision to walk away from the deal reinforces Cisco's challenges in navigating China's regulators amid the U.S.-China trade dispute, Bloomberg Intelligence analyst Woo Jin Ho wrote.

“Cisco can still partner with Acacia or others in sourcing high-speed optics for its gear, but we believe Cisco may temporarily shelve large, strategic deals due to the China regulatory roadblock,” he said.