In its latest acquisition, Cisco will add a large portion of Acacia Communications’ optical network products to its portfolio. The deal is expected to boost Cisco’s optical systems business. However, it also faces a legal dispute with Acacia. Here are some key points to consider about the deal.
Cisco Acacia Acquires Acacia Communications
Cisco acacia wall streetjournal has completed its acquisition of Acacia Communications, a provider of networking products and services. The acquisition is expected to strengthen Cisco’s focus on optical networking. Acacia offers a full range of long-distance data- transmission solutions, including solutions for wide-area networks, data centers, and subsea links.
The deal was originally valued at $2.6 billion, but Cisco has now increased its price to $4.5 billion, or $115 per Acacia share. The acquisition is expected to give Cisco a path to 5G network spending. The deal has already received approval from regulators in the U.S., Germany, Austria, China, and the European Union, and it is expected to close in the second half of this year.
Cisco and Acacia had previously been in talks to merge their companies. However, due to legal disputes, the deal was delayed, and Cisco eventually decided to buy the company for $115 per share. Acacia’s acquisition will help Cisco provide high-speed optical connectivity to data center operators.
Deal Boosts Cisco’s Optical Systems Portfolio
Cisco is bolstering its optical systems portfolio by acquiring Acacia Communications. Acacia develops and sells high-speed coherent optical interconnect products for networks. The acquisition will help Cisco compete for spending on 5G networks, which will need to handle an increasing amount of data over the next few years. The deal also puts Cisco’s optical portfolio ahead of competing companies with plug-and- play devices.
The acquisition will add capabilities in 100Gbps/400Gbps optics, silicon, and process technologies. The company’s technology helps move data among computer chips through optical connections, which are faster than electrical connections. As a result, this technology is expected to underlie many networking devices in the future.
The combined companies have a long history of pioneering innovation in routing silicon and optical systems. They have developed technologies such as circuit emulation and IP-over-DWDM. The company has also introduced new innovations in sustainability. Its enhanced Routed Optical Networking solution helps service providers increase capacity and minimize power consumption. The company’s new routers are built on an open networking platform, allowing them to be installed in greenfield deployments. In addition, its new pluggable optics – Bright 400G/ZR+ – are compatible with any DWDM network.
Growth Of Its Software Business
Cisco has recently announced a takeover offer for the cloud software maker Splunk Inc., which has been around since 2007. The deal is a recent one, but it is unclear where it stands. If the deal goes through, it will be Cisco’s largest deal ever. It would surpass its $7 billion acquisition of Scientific Atlanta in 2005. The acquisition of Splunk could give Cisco breathing room, but the company must still make the deal work for it.
The deal was almost derailed earlier this month when Chinese regulators refused to give the company the green light. Acacia claimed it could not secure Chinese approval in time, and Cisco countered by raising the purchase price by 64%. The Chinese regulatory approval process has become a more looming issue over major tech deals as waiting periods have gotten longer and U.S.-China relations have soured.
Cisco also plans to double its revenue in software by the end of the next five years. The software segment presents a potentially lucrative opportunity for the technology company, particularly with the explosive growth in data centers. But the company’s CEO echoes warnings from other technology executives that the federal regulatory environment could hinder the company’s progress.
Legal Dispute With Acacia
The Cisco-Acacia merger nearly came to a halt earlier this month, when Acacia moved to terminate the deal because it failed to receive regulatory approval from Chinese authorities. Cisco, meanwhile, responded by raising its purchase price by 64%. The issue of Chinese regulatory approval has become more of a thorn in the side of major tech deals, with waiting times increasing and a deteriorating relationship between the U.S. and China.
Despite the lawsuit, Cisco is still hopeful that the deal will go ahead. The company is trying to get the suit dismissed, and has said it is committed to paying $70 per share for Acacia stock. That’s a 46% premium over Acacia’s last closing price, which amounts to a $4.5 billion purchase price. The deal is not a sure thing, however, as Cisco has been struggling to reignite its growth engine in recent years.
The company’s latest acquisition, Acacia, is an important step in its strategy to move towards pluggable technology. This technology will enable network operators to transfer more data across networks more efficiently.